The new Statement outlines a modern standard for corporate responsibility; while framed in the context of the US, it should serve as a new standard for business globally.
Today, Business Roundtable — an association of CEOs of the US’ leading companies, working to promote a thriving US economy and expanded opportunity for all Americans through sound public policy — released a new Statement on the Purpose of a Corporation. The statement was signed by 181 CEOs committing to lead their companies for the benefit of all stakeholders — customers, employees, suppliers and communities, as well as shareholders.
“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 Business Roundtable. “These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
Since 1978, Business Roundtable has periodically issued Principles of Corporate Governance. Each version of the document issued since 1997 has endorsed principles of shareholder primacy — that corporations exist principally to serve shareholders. The new Statement supersedes previous statements and outlines a modern standard for corporate responsibility; while it is framed in the context of the US, it should serve as a new standard for business globally.
Industry leaders also lent their support for the updated Business Roundtable Statement, citing the positive impact this commitment will have on long-term value creation:
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“I welcome this thoughtful statement by Business Roundtable CEOs on the Purpose of a Corporation. By taking a broader, more complete view of corporate purpose, boards can focus on creating long-term value, better serving everyone — investors, employees, communities, suppliers and customers,” said Bill McNabb, former CEO of Vanguard.
“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.
The statement also received signatures from Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Bank of America’s Brian Moynihan and Boeing’s Dennis A. Muilenburg; along with a dozen representatives from the Sustainable Brands Corporate Member Network, including 3M CEO Michael Roman, Abbott CEO Miles D. White, AT&T’s Randall Stephenson, Cisco’s Chuck White, CVS Health’s Larry Merlo, Ford CEO James P. Hackett, GM’s Mary Barra, Mastercard CEO Ajay Banga, P&G’s David S. Taylor and more. The full list of signatories is available here.
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."
“This new statement better reflects the way corporations can and should operate today,” added Alex Gorsky, Chairman of the Board and Chief Executive Officer of Johnson & Johnson, and Chair of the Business Roundtable Corporate Governance Committee. “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”
CEOs have increasingly been pooling their power to rally behind a growing number of issues critical to the sustainability not only of business, but of society at large. In May, here in the US, a coalition of 13 CEOs — calling themselves the CEO Climate Dialogue — called on Congress to enact a market-based climate strategy; a week later, 75 more CEOs joined the call, meeting with a bipartisan group of federal lawmakers to urge Congress to pass meaningful climate legislation, including a price on carbon. Then in July, the CEOs of roughly 200 European companies announced that on November 1, they will be calling on three newly elected EU leaders to work with them to implement an overarching strategy for a Sustainable Europe by 2030.