In a move that could lead to some important changes, a group of leading CEOs from some of the nation’s largest corporations, the Business Roundtable, says that maximizing profits cannot be the only goal of a corporation and that other factors, like the good of their employees, must also be taken into account when making decisions.
The organization representing the nation’s most powerful chief executives is rewriting how it views the purpose of a corporation, updating its decades-old endorsement of the theory that shareholders’ interests should come above all else.
The new statement, released Monday by the Business Roundtable, suggests balancing the needs of a company’s various constituencies and comes at a time of widening income inequality, rising expectations from the public for corporate behavior and proposals from Democratic lawmakers that aim to revamp or even restructure American capitalism.
“Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity,” reads the statement from the organization, which is chaired by JPMorgan Chase CEO Jamie Dimon.
The group says its members “share a fundamental commitment to all of our stakeholders,” and commit to doing well by their customers, employees, suppliers and local communities. “Each of our stakeholders is essential,” the group adds. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”
I had to look to see if there’s any mention of the environment in the statement and it’s only there in the opening paragraph, where they say that they believe capitalism is the best means of creating a “healthy environment,” among other things. This is just a general statement, of course, and it remains to be seen whether and how it would actually effect corporate decision making. That’s the only test that matters, not broad declarations. If those words don’t translate into making good decisions for local communities, workers and the environment rather than focusing purely on the bottom line, they are utterly useless. But in a day and age of greater transparency and the effectiveness of social media campaigns to pressure business into doing at least a bit better on some issues, the public does have at least a little leverage to pressure them to make at least some meaningful change.