Earlier this month, the Business Roundtable announced a new statement of purpose that — if serious — signals a sea change.
The Business Roundtable is an association of many of the country's most powerful CEOs, and for more than 40 years it has occasionally issued a statement on the Principles of Corporate Governance — a justification of sorts for corporate behavior.
Since 1997, each version of that statement endorsed "shareholder primacy — that corporations exist principally to serve shareholders," even if it was at the expense of other groups, including the corporation's customers, suppliers, employees and communities.
Two weeks ago, the group adopted a new statement signed by 181 CEOs with the goal of promoting what it called "an economy that serves all Americans."
The new statement seeks to restore balance between all stakeholders, including the need to invest in employees (better pay, benefits and training) and to be be partners, not exploiters, of communities served by these corporations. The truth is most of us are all of these things: We are shareholders in these companies through our 401(k) accounts, we are employees of these companies, and we live in communities where they are based. To elevate one interest above the other was to become our own worst enemy at times.
“This new statement better reflects the way corporations can and should operate today,” Alex Gorsky, chairman and CEO of Johnson & Johnson and chair of the Business Roundtable Corporate Governance Committee, said 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.”
One of the five key principles in the statement is: "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."
Another: "We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses."
Is this a new attitude, or just an old platitude? We'll see.
After all, signatories include Jeff Bezos, founder and CEO of Amazon, which paid nothing in corporate taxes last year. Nothing is not respecting its employees, who have to pay more in taxes, or the communities are left without tax dollars.
And Darren Woods, chairman and CEO of ExxonMobil. Exxon has been accused of driving denial of climate change even though its own internal scientists warned of the seriousness of the threat more than 40 years ago — and more than a decade before it became a widespread public issue.
And Doug McMillon, president and CEO of Walmart. America's top retailer is doing better on wages today and leading on environmental issues and sustainability, but the business model that got it all started included setting up its stores on the outskirts of communities, or even outside communities, ravaging Main Streets all over the Midwest and South.
Not mentioned but also needing changed is the corporate practice of pitting communities and states against one another in bidding wars that result in outrageous (meaning complete) tax abatements, for example, which shift the tax burden back to employees.
If they're serious, we welcome the restoration of the social contract.
If they're serious.