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• Case | HBS Case Collection | January 2020 (Revised July 2020)

  BlackRock: Linking Purpose to Profit

  Rohit Deshpandé, Aiyesha Dey and George Serafeim

  The case revolves around the actions that Barbara Novick, co-founder and Vice-Chair of Blackrock, and Michelle Edkins, Global Head of Investment Stewardship, would need to take in response to the controversial CEO letters from Laurence (Larry) Fink, Chairman and CEO of BlackRock. Fink’s letters focused on the importance of corporate purpose and investing considering environmental, social, and governance (ESG) issues. The case also discusses Blackrock’s plans for a new model of shareholder engagement to help drive the changes proposed in the letters. The case presents the opportunity to discuss the governance role played by major institutional investors as well as how the responsibilities and actions of one large investor, BlackRock, should evolve in this role going forward. It is not clear whether BlackRock should play such a role and, if so, whether they have the ability to enforce corporate compliance and to carry out this role given they are primarily an index investor. The case is likely to generate spirited debate about the merits of BlackRock’s pronouncements and the importance of corporate investments in ESG themes and allow for discussions on measurement and disclosure strategies that can judge progress on these dimensions.

  Keywords: boards of directors; Institutional investors; disclosure; transparency; corporate purpose; Corporate profits; ESG; ESG disclosure metrics; corporate sustainability; engagement strategy of institutions; stewardship role of institutions; Corporate Governance; Governing and Advisory Boards; Institutional Investing; Accounting; Corporate Disclosure; Mission and Purpose; Profit; Environmental Sustainability; Climate Change; Diversity; Corporate Accountability;

  Citation:

  Deshpandé, Rohit, Aiyesha Dey, and George Serafeim. "BlackRock: Linking Purpose to Profit." Harvard Business School Case 120-042, January 2020. (Revised July 2020.)  View Details

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• Article | Advances in Strategic Management | July 2020

  Does Corporate Misconduct Affect the Future Compensation of Alumni Managers?

  Boris Groysberg, Eric Lin and George Serafeim

  Using data from a top-five global executive placement firm, the authors explore how an organization's financial misconduct may affect pay for former employees not implicated in wrongdoing. Drawing on stigma theory, they hypothesize that although such alumni did not participate in the financial misconduct and they had left the organization years before the misconduct, these alumni experience a compensation penalty. The stigma effect increases in relation to the job function proximity to the misconduct, recency of the misconduct, and an employee's seniority. Collectively, results suggest that the stigma of financial misconduct could reach alumni employees and need not be confined to executives and directors that oversaw the organization during the misconduct.

  Citation:

  Groysberg, Boris, Eric Lin, and George Serafeim. "Does Corporate Misconduct Affect the Future Compensation of Alumni Managers?" Special Issue on Employee Inter- and Intra-Firm Mobility. Advances in Strategic Management 41 (July 2020).  View Details

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• Article | JAMA, the Journal of the American Medical Association

  Sustainability, Business, and Health

  George Serafeim, Amanda M. Rischbieth and Howard K. Koh

  The coronavirus disease 2019 (COVID-19) pandemic has demonstrated that response demands involvement from every sector of society. As a major example, some businesses have stepped up in ways previously unimaginable. Garment companies have repurposed production to face masks and other protective equipment. Alcohol distilleries and perfumeries have shifted production to hand sanitizers. Automobile companies, both voluntarily and as compelled by the Defense Production Act, have worked with the ventilator industry to increase production. More broadly, an early analysis estimates that 64% of the US’s 100 largest publicly traded companies have made customer accommodations to COVID-19, including deferred bill payments; 43% have expanded paid sick leave, including, in some cases, for part-time and hourly employees. Such positive changes, however, are in contrast to a host of other public concerns, including that future vaccines and therapeutics may not be affordable for much of the world. In the next phase of the crisis, the safe reopening of society will require intense interactions between the health and business sectors to address these and other issues.

  Keywords: COVID; COVID-19; sustainability; health and wellness; corporate social responsibility; Health Pandemics; Health; Corporate Social Responsibility and Impact; Corporate Accountability; Health Care and Treatment;

  Citation:

  Serafeim, George, Amanda M. Rischbieth, and Howard K. Koh. "Sustainability, Business, and Health." JAMA, the Journal of the American Medical Association 324, no. 2 (July 14, 2020): 147–148.  View Details

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