A group of chief executive officers from nearly 200 U.S. corporations have redefined the core purpose of a corporation after meeting and the issuing of a press release stating that delivering shareholder value is no longer the main concern of organisations in 2019.
The press release was issued after a session of the Business Roundtable, an assembly of 181 chief executives from some of America’s largest corporations who have redefined the most important concern for organisations operating in the modern era.
The statement was signed by Jeff Bezos of Amazon, Tim Cook of Apple, Bank of America’s Brian Moynihan, Boeing’s Dennis A. Muilenburg and GM’s Mary Barra.
Shareholder value, the Business Roundtable says, is no longer the main focus of corporations, with chief executives instead pivoting and placing an emphasis on investing in their employees to empower them, delivering added value to customers, supporting outside communities and dealing with ethical suppliers.
CNBC News’ Maggie Fitzgerald says that “the reimagined idea of a corporation drops the age-old notion that they function first and foremost to serve their shareholders and maximize profits.”
The statement, signed by 181 CEOs says that “while each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,”
“We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”
“The American dream is alive, but fraying,” Jamie Dimon, chairman and CEO of J.P Morgan Chase and chairman of the Business Roundtable said in the 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.”
One of those signatories, Larry Link of BlackRock has in the past called on business executives to redefine the purpose of a corporation, pointing out the “inextricable link” of purpose and profit.
“Purpose is not the sole pursuit of profits but the animating force for achieving them” Fink wrote in a 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,” he said.
Kobi Simmat, CEO here at Best Practice says that “it’s my belief that equitably balancing all stakeholder’s interests in an organisation creates the most sustainable pathway to the future for that organisation.”
He continued to explain that “you can either have old school priorities where you put either shareholders, customers or staff in front of others, or you can step up and tackle the challenge of deploying equality and empathy to all stakeholders in your organisation.”
You can read the statement in full below.
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.