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In a letter to CEOs, Blackrock Inc. founder Larry Fink said that stakeholder capitalism is 'driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.'Lucas Jackson/Reuters

Larry Fink, founder and chief executive officer of the world’s largest asset manager, made ESG mainstream. Today, the BlackRock Inc. boss bristles at the notion that his brand of benevolent finance could be confused with left-leaning environmental and political activism.

Instead, as he writes in his latest letter to CEOs, the environmental, social and governance movement he champions is at the core of “stakeholder capitalism” - essentially, profit with purpose.

“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke,’” he says. “It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism.”

Perhaps. But is the message losing traction in a world that is becoming increasingly suspicious of ESG, and concerned that its scientific and administrative complexities, and required form-filling, may actually provide cover for greenwashing?

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Mr. Fink’s annual missive to corporate bosses is required reading, with the head of the US$10-trillion enterprise offering expectations of the companies in which it invests, along with healthy portions of forecasts and philosophy.

Two years ago, he made his view clear: Climate risk equals investment risk. His pronouncement is not the only driver, but since that time, capital flows into sustainable investments have surged.

In 2021, he made headlines with the message that the companies in BlackRock’s portfolios must disclose how they expect to thrive in a world of net-zero carbon emissions, and warned those that came up short faced potential proxy contests against management, and even divestment. It was seen as a wake-up call for corporations, as well as an indication of how high-finance was changing.

This year’s edition comes with the business world, and society in general, tired and cranky after two years of pandemic-induced uncertainty, and jaded about pronouncements that the globe is moving to a greener, more inclusive future. Seemingly endless restrictions and lockdowns will do that to people.

The COP26 climate summit last year finished with lofty goals and hope that governments and businesses could finally make progress dealing with a global crisis after years of slow-walking the necessary solutions. As it ended, the attention of businesses and consumers was quickly wrenched to surging energy prices and inflation in the old economy in which they still live and work.

Mr. Fink is not the first person to deride the concept of wokeness. What began as a movement to shine the spotlight on very real inequities faced by Black people with policing and economic opportunities, has morphed into a full menu of progressive and politically correct ideas.

Critics sometimes conflate it with ESG, as if businesses are taking on the tasks of reporting their impact on society and the environment to feel good about themselves and stay on side with all factions.

Mr. Fink says that is not the case at all. To be successful for their shareholders over the long term, he says, corporations need to embrace purpose, stick to consistent values and recognize they serve a full range of stakeholders. Profit remains the ultimate goal. “Make no mistake, the fair pursuit of profit is still what animates markets; and long-term profitability is the measure by which markets will ultimately determine your company’s success,” he says.

Certainly, he is not backing off from his demands on Blackrock’s portfolio companies, which represent a who’s who of global business. In fact, rather than just pointing out that the asset manager will flex its muscles as a key shareholder, Mr. Fink says he is working to give individual investors the power to participate in proxy votes. This could be a ways off, given multiple regulatory and technological barriers, but companies could feel more heat over their ESG performance in the coming years.

It was the catchphrase from the 1987 movie Wall Street, spoken by hard-driving financier character Gordon Gekko, that’s become emblematic of the financial industry’s excess of the era: “Greed, for lack of a better word, is good.” The idea was that self-interest brings innovation and efficiency.

There is still money to be made, but now larger problems have to be solved and multiple stakeholders served. Will a weary society buy in to Mr. Fink’s kinder, gentler greed?

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at

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