A group of ten asset managers have formulated questions for boards to assess whether their businesses are “genuinely purpose-led”.
Investors with assets worth $8trn, including BlackRock, Legal & General and Schroders, came together with the campaign group A Blueprint for Better Business to devise questions to be put to board chairs and chief executives as a means of determining whether their companies are driven by “purpose”.
The eight questions include enquiries into whether pay policy is linked to long-term success, the impact—positive and negative—a company has on society, and the external relationships most important for achieving purpose.
In a paper published online, Blueprint said: “There is a fundamental shift occurring both within companies and more generally in society; rather than regarding profit maximisation as the purpose of business, profit is increasingly being regarded as an outcome of a company’s purpose.
“In other words, rather than profit being the purpose, profit comes from pursuing a purpose that benefits society.”
Earlier this year Larry Fink, BlackRock’s chief executive, wrote in his annual letter to company boards that “without a sense of purpose, no company, either public or private, can achieve its full potential.”
Meanwhile, a revised corporate governance code for the UK has proposed that a “successful company” is led by a board whose function includes working to “contribute to wider society”.
Sacha Sadan, director of corporate governance at Legal and General, said: “Having a clear corporate purpose is a critical part of creating long-term sustainable growth that benefits all stakeholders.”