Larry Fink, CEO of BlackRock, the world’s largest investor with $6 trillion under management, evoked heated controversy with his remarks last week that his company would change its hiring and potentially its compensation structure to advance diversity and ensure that five years from now the company is not just “a bunch of white men.” This follows on the heels of his annual letter to CEOs asserting that companies need to embrace a purpose beyond just profit maximization. Critics, according to Fox Business, were swift to accuse Fink’s commitment to diversity as a form of “corporate socialism,” complaining about “the propriety of a public company executive using business resources and his perch as CEO to advance a personal agenda.” It seems one get criticized whenever race is raised as an issue, whether ignoring or promoting diversity. But who is better positioned to lead their firm into the future — the law firm that is perpetuating white male leadership or the investment firm that is disrupting its management by making a serious commitment to diversity? It’s time to stop pretending that business somehow exists in a vacuum that neither affects nor depends on the wellbeing of our society.

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Larry Fink, CEO of BlackRock, the world’s largest investor with $6 trillion under management, evoked heated controversy with his remarks last week that his company would change its hiring and potentially its compensation structure to advance diversity and ensure that five years from now the company is not just “a bunch of white men.” This follows on the heels of his annual letter to CEOs asserting that companies need to embrace a purpose beyond just profit maximization.

Critics, according to Fox Business, were swift to accuse Fink’s commitment to diversity as a form of “corporate socialism,” complaining about “the propriety of a public company executive using business resources and his perch as CEO to advance a personal agenda.” The Fox article went on to quote Charles Elson, a corporate governance expert at the University of Delaware, saying: “This is fundamentally not the role of a public company, and it’s unfair to investors who may not agree with his politics. A CEO shouldn’t use house money to further a goal that may not create economic returns.”

I couldn’t disagree more. Business leaders must finally, once and for all, let go of the outdated and erroneous notion that social factors — and not just diversity — are irrelevant to the economic success of our companies.

As a white male myself, it’s easy to understand why white men might react defensively to issues of diversity, but we must stop pretending that business somehow exists in a vacuum that neither affects nor depends on the wellbeing of our society. In fact, a growing body of evidence demonstrates that economic success is strongly determined by the way a company addresses social issues.

Our research report The Competitive Advantage of Racial Equity documents numerous examples of companies finding new sources of revenue and greater profitability by better meeting the needs of customers and employees of color. After all, a majority of youth under 18 in the U.S. are of color, and the white population is expected to be a minority by 2040 — a dramatic shift from a country that was 80% white as recently as the 1980s. Rather than imposing personal values on unwitting stockholders, Fink is, in fact, reshaping BlackRock to succeed in the future, taking the lead on an issue that every U.S. company will need to face very soon.

Nor is race the only social issue with economic consequences. Walmart has shaved billions of dollars of its annual expenses by aggressively reducing its environmental footprint, reducing waste, switching to renewable energy, and promoting a sustainability agenda. And Generation Investment Management, the top-performing, global, long-term-investment fund of the past 12 years, has achieved those results through an unwavering focus on sustainability.

Committing to a purpose and having a positive social impact is increasingly central to good management and shareholder value. Research by my Harvard Business School colleague George Serafeim has shown that companies seriously committed to a purpose outperform their peers. In developing the curriculum for the Harvard MBA course Creating Shared Value: Competitive Advantage through Social Impact, Michael Porter and I found more and more examples of companies gaining a competitive advantage by delivering a positive social impact. Each year, Fortune magazine publishes a list of 50 companies changing the world — firms that are having meaningful impact on social issues in a way tightly connected to their business — and the companies on those lists, on average, have outperformed the market.

Every company needs a healthy, well-educated, diverse, and productive workforce, sustainable access to natural resources, socially-responsible suppliers, customers who can afford to buy their products, and a prudent, stable and corruption-free government. The massive economic consequences of the recent U.S. government shutdown only further reinforce the point that effective and realistic government is essential to corporate prosperity.

Rather than fault leaders like Fink for imposing a personal agenda on their businesses, we must censure those CEOs who fail to take social consequences into account and, as a result, harm their shareholders’ returns. When Volkswagen found a way to defeat the emissions tests and Valeant Pharmaceuticals International raised prices on existing drugs to astronomical levels, management’s obliviousness to corporate responsibility and the social impact of their actions caused massive harm to their shareholders. There are numerous examples of the cost to shareholders when management is blind to social consequences, and yet I know of no instances when shareholders suffered because management was attentive to social issues. Still, somehow, the idea persists that attention to social issues is a cost — or a personal choice by left-leaning management — rather than a disciplined, far-sighted strategy to create shareholder value.

Astute managers and entrepreneurs are finding new sources of value creation through innovations that meet social needs (like Tesla’s electric cars and Revolution Foods, which supplies nutritious school meals) or find ways to hire and advance unskilled high school dropouts that improves productivity (like the GAP’s This Way Ahead program) or save health care costs by improving community conditions (like Humana). Finding profitable solutions to society’s challenges can deliver outsized shareholder returns.

Classical economics taught business leaders that social and environmental issues were externalities that had no effect on the business, but the evidence all around us shows that this is wrong. Today’s most successful companies have learned that the social impact of their business is a critical factor in their competitive strategy and operational effectiveness. It is Larry Fink’s critics, not Mr. Fink himself, who are imposing their anachronistic personal values to the detriment of shareholders.