Dear Business Roundtable CEOs: Some tips on avoiding purpose-washing
A roundup of helpful advice for the 200 CEOs that recently swore off their shareholder-first mantra
By: Toby Heaps & Adria Vasil / Corporate Nights Magazine / Posted September 6, 2019
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Alot has been written about how nearly 200 chief executives, including the leaders of Apple, Ford, Walmart and Pepsi, issued an eyebrow raising statement on the purpose of corporations recently. In a move that’s been both widely hailed and derided, the Business Roundtable, America’s most influential lobby group of corporate leaders, denounced its longstanding position that corporations exist principally to serve their shareholders. “It has become clear that this language on corporate purpose does not accurately describe the ways in which we and our fellow CEOs endeavor every day to create value for all our stakeholders,” wrote the Business Roundtable. “The American dream is alive, but fraying,” said Jamie Dimon, chair and CEO of JPMorgan Chase and chair of Business Roundtable.
There’s no denying the shareholder-first mantra has led CEOs to prioritize share buybacks over productive investments and to squeeze out short-term profits by continually shaving off jobs, outsourcing production to ever-cheaper, underregulated pastures and whittling tax returns down to (in Amazon’s case) zero or close to it.
In walking away from the shareholder primacy model, Dimon and the Business Roundtable maintain that their “modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”