If you’ve been following this blog, then this week’s “Statement of Purpose” by the Business Roundtable wasn’t a surprise. Corporate responsibility, as defined by 181 CEOs and led by Jaimie Dimon, is that companies exist to benefit customers, employees, suppliers and communities, not just stockholders.
This is a major change, considering that since 1977, each Business Roundtable’s statement has endorsed shareholder primacy, i.e., that corporations exist to serve shareholders.
For those that think that this is short-lived, consider that social issues have been undergoing both rapid and incremental change since the latter third of the 20th century.
Have we peaked? From environmentalism to sustainability, corporate and social responsibility, global warming, climate change, biodiversity loss, air and water pollution, energy and food security? No, and I will tantalize you with the comment that there is more on the horizon.
Not everyone believes that the “Statement of Purpose” is totally sincere. Many in the environmental community have already discounted it. Some wonder how a value will be established, or prioritization made, when faced with the often conflicting interests of different stakeholders. Others think that it is primarily “PR”, or even a form of insurance should a Democrat candidate win in 2020. After all, it echoes Senator Elizabeth Warren’s “accountable capitalism” bill.
What if closing a plant is good for shareholders, but not for workers, suppliers or the community? This opens up an interesting question of what that may mean for California’s class action laws.
Regardless of the immediate reason for this Statement, there is a long-term trend here that has ongoing implications regarding some of the future challenges facing business.