Corporate Leadership Is Recognizing that All Stakeholders Need to Be Served—Not Just Shareholders
They're causing businesses to redefine their objectives and go beyond serving just owners. This includes repurposing everyday practices and business strategies in the interest of customers, employees, community, and investors.
In 2019, the Business Roundtable released a statement officially redefining the purpose of corporations to serve not only investors but also their workers and community. In other words, instead of just creating profit for shareholders, the statement added four additional purposes: delivering value to customers, investing in employees, dealing fairly and ethically with suppliers, and supporting local communities (including being environmentally sensitive and incorporating sustainability practices).
This statement was signed by 181 CEOs and demonstrates the internal shift among the world’s leading corporations. Sustainability and social consciousness are no longer fads in business, but are now viewed as legitimate strategies that businesses can use to reduce risk and create opportunities. As they strive for positive impacts on all stakeholders rather than simply fulfilling financial responsibilities, some businesses are truly becoming a force for good.
"Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term," said Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and Chairman of the Business Roundtable. "These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
Another example is the transition companies are making to become benefit corporations, instead of traditional corporations. A 2020 article by B The Change, explains that the "benefit corporation model is gaining new momentum during this time of global uncertainty and social upheaval" and cites Lemonade, an insurance tech startup, as an example of a benefit corporation that went public in 2020. And Lemonade was not the first benefit company to have an IPO, Laureate, also a benefit corporation, went public in 2017.
Clearly, the way leaders view the role of companies in society is shifting. Instead of just aiming to please shareholders, a broader group of stakeholders is being respected—it seems that expanding a company's purpose is something that leaders are ready to embrace.
Corporate Governance Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’
A Growing, Resilient Alternative in a Global Crisis: Stakeholder Capitalism, B The Change, July 20, 2020.
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