Responsible finance: The pledge that never was
The US Business Roundtable has changed its statement of purpose to indicate that shareholders’ ambitions for profits have to be balanced with society’s goals, but what is it that these chief executives plan to do?
The US Business Roundtable, which represents the chief executives of 192 large US companies, including Bank of America, JPMorgan, Morgan Stanley, Citi, Wells Fargo and several other large financial firms, released a new ‘Statement of purpose of a corporation’ in August. It has ruffled quite a few feathers.
The Roundtable’s new statement now reads: “Business leaders should commit to balancing the needs of shareholders with customers, employees, suppliers and local communities,” as opposed to its former statement from 1997 that said: “The principal objective of a business enterprise is to generate economic returns to its owners.”
It can be read in different ways, depending on your level of cynicism. The cynic’s view might be that now that shareholders are demanding higher social and environmental standards from the companies in which they invest, the chief executives of those companies have decided that shareholder preferences are no longer the be-all and end-all.
But cynicism aside, apparently some of the Roundtable’s members felt the new statement better reflected their ethos and would encourage other members to step up their commitments to society. I would love to know which ones. It’s an unusual and very disparate group of corporations whose commonality seems only to be their size and, therefore, power.