The New Normal

© 2020 Jay Gary Finkelstein

 Historical Perspective – Circa 1970

“The Social Responsibility of

Business is to Increase its Profits”
Professor Milton Friedman, The New York
Times Magazine, September 13, 1970

Advocated that businesses exist solely to

produce profits for their shareholders and that
promoting desirable social ends or having a
“social conscience” has no role in a capitalist
economy.
 JP Morgan Chase – 2017 Annual Report
“Economic growth fuels economic
opportunity. . . .
“Momentum we are seeing in economies
around the world should be unequivocally
heralded as good news. . . .
“It is not preordained that an expanding
economy automatically translates into
greater opportunity for all. . . .
“The private sector must step up and do
more to ensure that everyone shares in
the rewards of a growing economy.”
 JP Morgan Chase - 2017 Annual Report

“At JPMorgan Chase, [our] objective [is] to

be a positive force in society and to help
solve today’s biggest challenges.

“Across our firm, we are leveraging our

resources, capabilities and core
business to . . . invest in opportunity —
something we know will pay
dividends not only for our
communities but for our firm
as well.”
Bank of America: Capital deployment drives solutions to global
challenges
(January 2018)

 We face big challenges such as climate change,

gender parity, access to clean water and affordable
housing.

 They can’t be solved by philanthropy or the public

sector alone.

 Our business strategy is to connect private

capital with the innovative ideas
that are seeking to tackle these
challenges - all while generating a strong return
for our investors.

 This strategy grows our business responsibly while

also helping us drive social and economic progress.
 “A Sense of Purpose”
Blackrock 2018 letter to CEOS
https://wwvv.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter

 As BlackRock approaches its 30th anniversary . . . [we] reflect

on the most pressing issues facing investors today . . .

 We are seeing a paradox of high returns and high anxiety.

 Many individuals across the world are facing a combination of

low rates, low wage growth, and inadequate retirement
systems.

 We also see many governments failing to

prepare for the future, on issues ranging from retirement
and infrastructure to automation and worker retraining.

 Society increasingly is turning to the private

sector and asking that companies respond
to broader societal challenges. . . . Society is
demanding that companies, both public and private, serve
a social purpose.
 Group of top CEOs says maximizing shareholder profits
no longer can be the primary goal of corporations
Washington Post, August 19, 2019
 The Business Roundtable announced a dramatic change
from prior stance that shareholders’ interests should come
above all else.

 New position articulated a balancing the needs of a company’s various

constituencies.

 Acknowledged rising expectations from the public for improving corporate

behavior.

 FUNDAMENTAL COMMITTMENT to doing well by all stakeholders:

customers, employees, suppliers and local communities. “

 “We commit to deliver value to all of them, for the future success of our
companies, our communities and our country.”
 CEOs Feel Pressure to Take Social Action
Axios, Sept. 22, 2019

 Business leaders feel pressure to take social action:

 JPMorgan Chase, Starbucks, Walmart, Amazon and many others

increased their minimum wage to $15.

 Delta Airlines returns billions in profits to employees

 Amazon . . . became the first to sign The Climate Pledge to be net-zero

carbon across its businesses by 2040

 Stripe, the online payments platform, announced . . . that it plans to

spend at least $1 million a year to pay for direct removal of carbon
dioxide from the atmosphere.

 Bank of America last year stopped lending . . . to makers of assault

weapons.
 This broader focus on Societal
Interests will continue to impact
International Negotiations