Larry Fink recently created a shockwave. As cofounder, chairman, and CEO of BlackRock, one of the world’s largest global asset management firms, in an open letter to CEOs he caught the attention of financial markets and beyond by insisting on the importance of companies serving a social as well as financial purpose.

Because BlackRock manages more than $6 trillion in assets, Mr. Fink’s announcement has the potential to help change companies’ behaviors in big ways. But this will happen only if BlackRock and other large asset managers add social performance to their evaluations of companies. To do so, investment funds will need to collect new data.

The good news is that over the past decades, many initiatives have contributed to developing standards to assess companies’ social performance. The Sustainability Accounting Standards BoardGlobal Reporting Initiative, and B Lab are examples of initiatives that provide assessment tools companies and investors can use in their efforts to achieve both financial and social goals. In this light, Mr. Fink’s announcement did not come out of the blue. It is in part a result of the long and hard work of these initiatives and many others around the world to help change the face of capitalism by making it more socially conscious.

I study this kind of radical change in my research and teach my students about what it takes to succeed in implementing such change. The leaders of these initiatives have had to agitate to convince stakeholders of the need for change, innovate by developing new standards and certification systems, and orchestrate the diffusion of these changes to have an impact. What is different now is that the movement that they launched is gaining increased momentum, as influential mainstream leaders like Mr. Fink join the ranks.

Still, a great deal more needs to happen. Standards and measurement systems are only one part of the solution for changing corporate behaviors, and they are difficult to get right. But as long as we know about the assumptions used to develop the standards and remain open to refining them, we will have the kind of learning approach that will enable us to cautiously and constructively develop new accountability systems for companies.

The Sustainability Accounting Standards Board exemplifies this learning approach. After extensive research regarding the aspects of social performance to which investors should have access in order to make informed investment decisions, it engaged in a public comment period, soliciting feedback from various stakeholders about the provisional standards it developed by sector. As such, it is iterating its assessment tools and engaging with individuals and entities across sectors to refine them and arrive at meaningful and useful standards.

Sustainable Business Strategy

Besides holding companies accountable, we also have to help them as they transition to pursuing social objectives alongside financial ones. Too few managers are familiar with fulfilling financial and social goals simultaneously, and there are few templates for developing organizational processes and systems to help them do so. Internally, organizations often struggle to allocate resources toward these different goals and to deal with the trade-offs that they face. I have observed that even large corporations renowned for their social responsibility still struggle to overcome this challenge.

The focus of my research has been social enterprises, which provide laboratories to learn about the joint pursuit of social and commercial objectives in organizations. In the arenas of microfinance and social enterprises that help train and mentor the long-term unemployed while generating revenue from sales, among many others, I have encountered organizations that have been able to sustainably pursue social and financial goals over time. What these organizations have in common is their ability to cultivate a hybrid culture committed both to their social mission and profitability. A willingness to develop this kind of culture in corporations is not enough to succeed. It requires revisiting and changing all the organizational processes and systems initially designed to pursue only financial goals.

Mr. Fink was right to take a stand with the CEOs of major companies. They have the chance to rise to the occasion and participate in the redesign of corporations. What is at stake is reshaping the face of capitalism as we know it. Historically, the corporate sector has focused mostly on profit maximization, and we as a society have paid a cost for such blind pursuit regardless of the social and environmental consequences, as the 2008 financial crisis and increasing inequalities have made clear.

This kind of systemic change, however, does not sit only on the shoulders of CEOs. Today, corporations that attempt to incorporate a social purpose frequently have to deal with competing market demands that still push them to focus exclusively on financial performance. We must take action to create an ecosystem within which companies are encouraged to pursue social goals along with profit. We all have a role to play, both in creating the demand—as consumers, shareholders, investors, policymakers, and activists—and in making the environment more conducive by agreeing on industry measurement standards, providing templates for supportive organizational processes and systems, training business leaders on why and how to pursue social goals along financial ones, and addressing legal limitations wherever they exist. The transformation of capitalism will not happen overnight, but there are actions that we can all take to make it possible.

This post was originally published on HBS Working Knowledge 

About the Author

Julie Battilana is the Joseph C. Wilson Professor of Business Administration at Harvard Business School, where she is a member of the Social Enterprise Initiative, and the Alan L. Gleitsman Professor of Social Innovation at Harvard Kennedy School, where she is also the founder and academic co-director of the Social Innovation and Change Initiative.