When the Business Roundtable speaks, do people listen?
Maybe that depends on what the venerable network of US-based CEOs says and what actions they offer to back up their words. This week they declared in a formal joint statement on "the purpose of the corporation" that the duty of business has to extend beyond creating shareholder value.
Do you believe that the formidable and historically quite thoughtful organization is a bona fide alter ego for the collective views of the CEOs of Apple, Pepsi, Walmart, JP Morgan Chase, Bank of America, Amazon, General Motors, Blackrock and others? Then you really want to know what these leaders intend to do next. Right?
What actions did they pledge to take?
According to the New York Times synthesis of the group's statement, "[t]he Business Roundtable did not provide specifics on how it would carry out its newly stated ideals, offering more of a mission statement than a plan of action. But the companies pledged to compensate employees fairly and provide “important benefits,” as well as training and education. They also vowed to “protect the environment by embracing sustainable practices across our businesses” and “'foster diversity and inclusion, dignity and respect.'"
Not bad for now. It will be worth seeing what comes of the tone the group set with this gesture at a time when the US is politically polarized and the economy's future anyone's guess.
The statement bore the mark of BR member and Blackrock CEO Larry Fink, who in January of 2018 famously admonished his portfolio companies in a letter, saying that "[t]o prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
I wrote in this space at the time that Fink was calling for robust stakeholder engagement in a manner that the market was more prepared to reward than perhaps it had ever been before; and that he was rebuking free-market icon Milton Friedman at a time when global acrimony and disfunction were reaching burst-into-flames proportions. Fink got panned for it among the chattering classes in business circles, but the writing was apparently on the wall in more than a few other C-Suites. This week's BR statement proves he is not alone on the subject of the urgency of things.
Expectations of business have clearly changed and your thinking as a leader has too. It's time to make a plan to put positive social impact at the center of your growth strategy. If ever there was a time to follow the crowd (assuming that the BR leaders told us for real this week where they are going) then surely it is now. Your move.
Andy Tarsy is Principal and Founder of Emblem Strategic LLC.