What About the Other 19?

Yesterday, I wrote about the Business Roundtable’s newly released Statement on the Purpose of a Corporation, a declaration signed by 181 of its 200 member CEOs.

Nineteen corporations decided not to sign on to a statement that broadens the purpose of a corporation from “shareholder primacy” to a “fundamental commitment” to all of their stakeholders. In other words, it’s no longer sufficient or sustainable to be just about the money. Corporate interests must now include employees, suppliers, communities and the environment.

Those who did not sign include the Blackstone Group, GE and Alcoa.

While no one will be surprised if this new statement fails to result in systemic change, considering that it lacks any measure of accountability, it is a big symbolic step forward that has already met with significant resistance.

The Council of Institutional Investors said, “Accountability to everyone means accountability to no one. It is government, not companies, that should shoulder the responsibility of defining and addressing societal objectives with limited or no connection to long-term shareholder value.”

This reactive dualism is not surprising in the least. Rather, it is an instructive reminder of the prevailing limits of the corporate imagination and just how far we are from making the modern workplace more fully human.

In today’s New York Times, Andrew Ross Sorkin summed it up nicely, “For whatever progress may have been made Monday, it is hardly clear the debate is over. In fact, the fight for corporate identity is just beginning.”

Whether you are an owner, a leader, an employee, a supplier or a customer, I hope you see the possibility that exists for you to fight for that new corporate identity where you work and live. Raise your expectations, of yourself and your colleagues, and trust that an expansive application of accountability is the best strategy for long-term growth you can possibly employ.


 

The Purpose of Business

Today, the Business Roundtable, a group of 200 CEO’s, announced that 181 of its members signed off on a new statement of the purpose of a corporation. This is a massive shift from the one-note philosophy of “shareholder primacy” to an approach that is reflective of a modern workforce – a modern society – that deserves and demands “meaning and dignity.”

This affirmation of a more wholistic, human-centric approach to business will require accountability of the highest order. Please read the statement below and consider how you will bring it to life and sustain it within the walls of your own workplace.


 Statement on the Purpose of a Corporation

Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.

Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth.

While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:

  • Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
  • Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
  • Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
  • Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
  • Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.

Source: The Business Roundtable