Shareholder value is no longer the primary focus of some of America’s top business leaders.
The Business Roundtable, a group of chief executives of major U.S. corporations, issued a statement with a new definition of the “purpose of a corporation”.
The reimagined idea of a corporation abandons the old notion that corporations operate primarily to serve their shareholders and maximize profits. Rather, investing in employees, delivering value to customers, dealing ethically with suppliers, and supporting external communities are now at the forefront of American business objectives., according to the statement.
“While each of our individual companies fulfills its own corporate purpose, we share a fundamental commitment to all our stakeholders,” said the statement signed by 181 CEOs.. “We are committed to delivering value to all of them, for the future success of our companies, our communities and our country.”.
Wall Street consciousness has been at the forefront of American business and politics recently, as issues of economic equality and fair trade practices dominate the 2020 election season and the general news cycle.
The Business Roundtable, founded in 1972, has issued many statements on corporate governance principles since the late 1970s. It said that this new definition “replaces” past statements and describes a “modern standard for corporate responsibility”.
“The American dream is alive, but frayed,” he said in a press release. Jamie Dimon, Chairman and CEO of J.P. Morgan Chase and chairman of the Business Roundtable.
Along with Dimon, the statement received signatures from chiefs such as Amazon’s Jeff Bezos, Apple’s Tim Cook, Bank of America’s Brian Moynihan, Boeing’s Dennis A. Muilenburg, and GM’s Mary Barra.
“Leading employers are investing in their workers and communities because they know it’s the only way to achieve long-term success. These modernized principles reflect the business community’s unwavering commitment to continuing to drive an economy that serves all Americans.”, Dimon said.
Another signature is from BlackRock chief Larry Fink, who previously called on CEOs to reevaluate a corporation’s purpose, specifically the “inextricable link” between purpose and profit.
“The purpose is not the sole pursuit of profit but the driving force to achieve it.”, Fink wrote in his 2019 annual letter to shareholders. “As divisions continue to deepen, companies must demonstrate their commitment to the countries, regions, and communities where they operate, particularly on issues central to the world’s future prosperity.””.
Fink said fundamental economic changes and the U.S. government’s failure to provide lasting solutions have forced society to look to corporations for guidance on social and economic issues, such as environmental safety and gender and racial equality.
The original note in: https://www.cnbc.com/2019/08/19/the-ceos-of-nearly-two-hundred-companies-say-shareholder-value-is-no-longer-their-main-objective.html