Did you feel the tremors rocketing through the economic universe this week as the world shifted on its access and the stars realigned in the heavens? 183 members of the Business Roundtable, including the CEOs of some of America’s largest corporations, issued a revised Purpose of a Corporation statement which says increasing shareholder value should no longer be the sole and exclusive focus of an incorporated business. Companies must also invest in their employees, deliver value to their customers, and deal fairly and ethically with their suppliers, the new position paper says, according to a report by the New York Times.
Wait, what? Corporations should be run with equity and ethics in mind? Are you serious? This goes against everything the current occupant and his enablers have been preaching for the past two and half years. It flies in the face of the policies the Koch Brothers and the fossil fuel companies have been advocating for 50 years. It does violence to the “greed is good” mantra that has been the touchstone of corporate America since the Reagan administration.
The new position paper is awfully convenient, don’t you think? The corporations got a gigantic payday last year in the form of a $1 trillion tax cut they said they were going to use to increase investment and pay bonuses to workers. Instead, most of the money wound up fattening the wallets of senior management. While workers pay into the federal treasury every week — most conservatives don’t want to acknowledge that everyone who draws a paycheck pays into social security and medicare whether or not they owe federal income taxes at the end of the year — most of these corporations pay nothing at all to support the US government.
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” the new declaration says. The companies who signed the new policy statement include major corporations such as Apple, American Airlines, Accenture, AT&T, Bank of America, Boeing, BlackRock, and JP Morgan Chase. Jamie Dimon, the CEO of JPMorgan Chase says,“We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”
Here is more about the commitments made in the new Purpose of a Corporations proclamation:
- 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.
Can You Say “Self-Serving?”
It’s hard not to see this proclamation as anything but self-serving. JP Morgan Chase and BlackRock are still heavily invested in coal, oil, and gas companies. There has been no public outcry from corporate boardrooms about the inhuman treatment of detainees and their children by the current administration, which argued with a straight face to a federal judge last week that there is no legal obligation to provide those in detention with soap or toothpaste.
None of them have called out the government for the obscenity of inveigling the Israeli government to deny entry to two sitting members of the US Congress or the absurdity of disrupting the global economy to slap China around on the subject of international trade. While that is an issue that deserves to be addressed, it should not be done with a ham-handed, meat ax approach that puts the livelihood of farmers and workers at risk.
“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.
“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.
Bernie Sanders, Senator from Vermont and candidate for president, was cautiously optimistic in his remarks. “[W]e need more than a public relations stunt,” he said. “We need a concrete plan on how they will bring back American jobs overseas, pay all workers a living wage with good benefits, stop attacking unions and start paying their fair share of taxes.” All excellent points.
A Change In The Zeitgeist?
Why is this happening now? “They’re responding to something in the zeitgeist,” said Nancy Koehn, a historian at Harvard Business School. “They perceive that business as usual is no longer acceptable.” Klaus Schwab, the chairman of the World Economic Forum, adds that the accelerating technological disruption of the traditional work force had led to greater sensitivity toward corporate responsibility.
“The threshold has moved substantially for what people expect from a company,” he said. “It’s more than just producing profits for the shareholders.” But actions will speak louder than words, he adds. “It’s the right thing to do but we have to continue to put flesh to the bones.”
Enough Platitudes. Now DO Something!
The companies could show they are serious about their newfound social responsibilities by calling for the immediate imposition of market adjustments that would force those responsible for carbon emissions and other pollutants that accelerate a warming environment or befoul the Earth to pay for the impact of their practices. It is insane that some of the world’s largest corporations can continue to endanger every living thing on the face of the Earth and face no financial penalty for doing so.
So come on, Jamie Diamond and Laurence Fink, CEO of BlackRock. Put some muscle behind your pious mouthings. It’s hard for individuals to fight the global economic system but you have access to the levers of power and could make fees on carbon, methane, and single use plastic happen in a matter of weeks if you called the right people and pushed the right buttons. Do that and we might start to believe you and your fellow corporate leopards have really changed your spots.