My firm, Village Capital, always tells entrepreneurs to build a product that’s a painkiller, not a vitamin.

Vitamins are products people theoretically want, and make you feel better. People don’t need them, though. Painkillers are things that are necessary — not just nice to have. Put it this way, when was the last time you bought a vitamin but forgot to take it? What about the last time you took a painkiller?

In the 1970s, Milton Friedman and a group of economists declared that the purpose of a firm was to serve its shareholders — maximizing stock value was the only consideration a business could have. About a decade ago, a group of investors coined the term “impact investing” to describe a strategy of investing in businesses that feel responsible to more than just shareholders. Businesses have stakeholders, including the environment, the communities where they operate, and the people they serve. Impact investing was a proactive strategy to help integrate them all.

Not just profit — impact

As I describe in my book, The Innovation Blind Spot, impact investing has seen a lot of momentum in the past decade. But for Fortune 500 CEOs and typical large investors such as pension funds, it’s still a vitamin. Lots of CEOs talk about the impact their company has, and market around that impact, but it’s rare for a company executive to think, “If my company doesn’t make an impact, my stock price will go down; I’ll lose money; and the board will fire me.”

I guarantee you that CEOs think about quarterly returns ahead of thinking about what they can do for their community. After the popularization of Milton Friedman’s shareholder theory, investors developed the “fiduciary rule,” where CEOs and boards are required to do what is best for shareholders, and if they intentionally do something that hurts their financial value, they can be sued.

Until now. Larry Fink, chief executive of BlackRock, which manages $6 trillion in investments, told business leaders that if they want to do business with BlackRock moving forward, they’re going to need to contribute to society in addition to making a profit. It’s an enormous step from one of the world’s most influential money managers.

Innovation Blind Spot: Ross Baird on bridging the entrepreneurial gaps that divide the U.S.

Impact, the cure for pain

If BlackRock does what it says it’s going to do — if they start to sell stocks in companies that can’t firmly demonstrate the impact they are having, it would mean that the stock price of a business will depend, at least in part, on whether or not that business is doing something positive for society. It will mean that a company’s impact — positive or negative — becomes a painkiller, not a vitamin.

Think about this decision-making process from the perspective of a CEO. You need your company to make money, which means you care about your stock price. Your stock price depends not on your quarterly earnings but on what investors are willing to pay for it. And if large investors believe that you are a despicable company, you could be very profitable, but no one will want to own your stock. (As one extreme example: Harvey Weinstein has made a lot of money for a lot of people, but now his company is going into bankruptcy because of the values he lived by while running it.)

If we actually want businesses to care about people, the people who run businesses need to think of impact as a painkiller. BlackRock’s decision could actually change the day-to-day behavior of CEOs, boards and leadership teams in ways that philanthropy, CSR and past impact investing initiatives have not.

A cynic might say that this is just a PR ploy, or that it will be difficult to measure the impact of a company. But intentionality and measurement matters. In working with BlackRock as a partner over the past few years, I know these intentions are long-term and true — Larry Fink has been writing about this for years, and BlackRock has seriously resourced the measuring how social and financial externalities relate to a company’s long-term financial risk and return.

Only time will tell, but I’m going to eagerly follow this experiment. And though I will become one of BlackRock’s smallest investors worldwide, I’ll put my money where my mouth is — by transferring some money to iShares.

Ross Baird is president and co-founder of Village Capital, and author of the best-selling book The Innovation Blind Spot.