Becoming a Purposeful Board: Improving the world improves corporations.

• Author: Jones, Dale E.
• Position: DIVERSIFIED SEARCH GOVERNANCE LETTER

When we think of inspirational words, we often think of those from great leaders: the Rev. Dr. Martin Luther King, Jr., Mahatma Gandhi, Mother Teresa, Winston Churchill. We don't often think of contemporary corporate titans, whom we assume are too busy thinking about financial strategy, tumult in global markets, and long-term gains to take pen to paper (or fingers to keyboard) to give us inspiration and insight into the pressing issues of our times.

But Blackrock chairman and CEO Larry Fink is no ordinary corporate leader, and again this year he defied the image of the global financier as merely a calculating monetary tactician, though Blackrock manages some $1.7 trillion in investment funds.

In his 2019 annual letter to CEOs, provocatively titled "Purpose & Profit," Fink again stressed his belief that "attracting and retaining the best talent increasingly requires a clear expression of purpose." Purpose, he wrote, unifies management, employees and communities, and drives ethical behavior. "Purpose guides culture, provides a framework for consistent decision-making, and, ultimately, helps sustain long-term financial returns."

The letter is a follow-up to Fink's previous one in 2018 where he wrote that "society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society."

I've been thinking a lot lately about Fink's letters, and not because so much of their thinking mirrors my own. I've served on several nonprofit boards, including Teach for America and the Salvation Army; nonprofit boards, by their very nature, always carry a lofty sense of higher purpose as part of their collective missions. What's more interesting, as reflected in Fink's letter, is how we are now seeing private and corporate boards taking up this mantle, looking inward to ask what they should be doing--or at least doing more of--to make the world a better place.

A change in attitude

We've come a long way from the days of Milton Friedman admonishing companies to remember that "the business of business is business."

Today, even the term "corporate social responsibility" is becoming passe, replaced by an even stronger call to action for corporate intervention in societal good. In a thoughtful article last July for the Harvard Law School Forum on Corporate Governance and Financial Regulation, several analysts from...