Business Roundtable on Monday announced the release of a new Statement on the Purpose of a Corporation signed by Apple CEO Tim Cook, Amazon CEO Jeff Bezos, IBM CEO Ginni Rometty, Goldman Sachs CEO David M. Solomon, amid a total of 181 CEOs who commit to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.
Since 1978, Business Roundtable has periodically issued Principles of Corporate Governance. Each version of the document issued since 1997 has endorsed principles of shareholder primacy – that corporations exist principally to serve shareholders. With today’s announcement, the new Statement supersedes previous statements and outlines a modern standard for corporate responsibility.
“The American dream is alive, but fraying,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable, in a statement. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
“This new statement better reflects the way corporations can and should operate today,” added Alex Gorsky, Chairman of the Board and Chief Executive Officer of Johnson & Johnson and Chair of the Business Roundtable Corporate Governance Committee, in a statement. “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”
Industry leaders also lent their support for the updated Business Roundtable Statement, citing the positive impact this commitment will have on long-term value creation:
“I welcome this thoughtful statement by Business Roundtable CEOs on the Purpose of a Corporation. By taking a broader, more complete view of corporate purpose, boards can focus on creating long-term value, better serving everyone – investors, employees, communities, suppliers and customers,” said Bill McNabb, former CEO of Vanguard, in a statement.
“CEOs work to generate profits and return value to shareholders, but the best-run companies do more. They put the customer first and invest in their employees and communities. In the end, it’s the most promising way to build long-term value,” said Tricia Griffith, President and CEO of Progressive Corporation, in a statement.
“This is tremendous news because it is more critical than ever that businesses in the 21st century are focused on generating long-term value for all stakeholders and addressing the challenges we face, which will result in shared prosperity and sustainability for both business and society,” said Darren Walker, President of the Ford Foundation, in a statement.
The Business Roundtable Statement on the Purpose of a Corporation is below and the full list of signatories is available here.
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: Business Roundtable
MacDailyNews Note: See all of the signatories here.
Sorry, I don’t want corporate fingers in my life and community anymore than government ones. This is bull****, and they can get bent. These companies are run by egos, not CEOs.
For a long time, the economic tenet was that the purpose of corporations was to maximize shareholder value, i.e., to pay attention only to return on investment. But another way to state this is that the purpose of corporations was to maximize shareholder satisfaction, and for a long time, shareholders were concerned only about money. But society is changing and what shareholders want from the companies they own is more than just a maximum financial return on investment. With potentially hundreds of thousands, perhaps millions of different shareholders. figuring out how to maximize satisfaction of such a diverse group is difficult. There will be many competing interests.
Many of the largest shareholders, such as pension funds, DO want corporations to take a more active role in addressing things of interest to their constituents, many of whom are customers, employees, and communities where they live. So sorry James, times are changing, and you’re part of s shrinking minority.
A corporation can help to serve the community if they do things that help to promote the welfare of the entire community like not polluting, contributing to education, helping with infrastructure, and so on. When a corporation gets involved in identity politics, it serves itself, a few specific collectives, and erodes the greater culture. When it inserts itself into issues like illegal immigration it’s just enforcing its opinion on people. And worse, when it censors people who have a different opinion than their “garden of pure ideology,” they undermine freedom of speech. It all depends.
All I am saying is that large institutional and individual investors are already exerting much more influence on corporate behavior beyond maximizing return on investment than they have in the past. I would think that financial results would be the next big driver of corporate behavior. Many large investors want their corporations to be more socially active and the vast majority of customers don’t seem to care. You don’t have to like it, but that’s the way things are going these days.
Great comment James which does reflect the sentiments of the 99% of us! This monopoly trend of corporations needs to end to truly represent the interests of the American and International community,
A – I don’t think James speaks for 99% of us. A lot of us want corporations to act responsibly. Corporations, like governments, already affect every single aspect of our lives. Simply wishing them away isn’t going to work.
For that matter, a lofty PR release from the Business Roundtable isn’t going to work either.
Unfettered capitalism is as toxic as unfettered communism. This country worked best when governmental policies but brakes on the inherent greed of big businesses. Those brakes have been slowly removed over the past 40 years. It’s time for the pendulum to swing back.
“… Unfettered capitalism is as toxic as unfettered communism…”
Oh please. Nothing has pulled more people out of poverty than capitalism. Communism has murdered millions.
Capitalism still does.
Hey Hong Kong, quit yer whining… it’s time for the pendulum to swing back.
Thelonius: are US corporations capitalist or communist?
I think everyone in the USA would admit that the large corporation is the natural embodiment of unfettered capitalism — whereby the people with money get to run pyramid organizations that decide what gets built where when and how, with no government officials on the board. All agreed?
Okay now explain why if all regulations are bad and unfettered capitalism is good, WHY DID AMERICAS GIANTS OF INDUSTRY MOVE THEIR PRODUCTION TO COMMUNIST CHINA IN THE FIRST PLACE???
I’ll give you a hint: because corporations don’t give 2 sh!ts about your politics. They will happily cowtow to dictators and communist regimes if it will save them a dime on their balance sheets. They push propaganda claiming how all the rules that make America a decent place to live, with clean air and water etc, is too expensive. Corporations willingly submitted to non-capitalist, non-democratic rulemaking in nations where near slave labor is the norm in order to line their pockets with short term profits. Not a single corporation including Apple is even thinking about pulling out of China, or Saudi Arabia, or any place that you label as an inferior society. Profit before people — which in the real world means profits before democracy. The extreme capitalist will declare this to be a fiduciary duty, to screw Americans if on paper you can give investors a few pennies more in profits and ignore the next generation of communist companies that will rip off America with our tech.
Bottom line: democracy might be better for the people when managed properly, but corporations strongly prefer to avoid it whenever possible.
Someday you’ll have to reconcile your fanboyism for Apple with the fact that Tim Cook is happy to outsource everything to communist China. Just like Ivanka Trump clothing, as a matter of fact.
Past time for share holders to remove Tim Cook.
Just make all Apple products, including the components in the US instead of making bullshit corporate-speak pronouncements.
Apple doesn’t make anything, they contract to other folks that make it. You would first have to get THOSE companies (and their many suppliers) to set up shop in the US.
60% of Apple revenue comes from outside the United States. Why should it retreat into economic isolationism and dismiss all those customers?
“Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity.”
Huh? Although ideal, a band of corporates is now determining other’s life meaning, dignity and success! It’s grand posturing with a dose of hubris.
I’m confused. What’s wrong with success through hard work and creativity? Sounds like the American Dream to me. Why should “corporates” reject the promotion of meaning and dignity? Again, that sounds like the sort of thing that used to be a commonplace in small-town patriotic speeches. What’s your alternative, Gordon Gecko and “Greed is Good?” The statement basically just says that corporate citizens of the US should act like we would expect any American citizen to do.