Empty promises!
In August 2019, 181 CEOs in the U.S. signed a pledge that they would lead their companies in the interests of all stakeholders, not just shareholders. So did they follow through?
New research looks at the 2020 corporate documents, like annual reports to shareholders, that companies have published since signing the Business Roundtable (BRT) stakeholder pledge and finds that:
- Corporate governance guidance still reflect shareholder primacy;
- None of these companies accepted that the BRT Statement required any changes to how they treat stakeholders;
- The great majority of these companies did not even mention their signing of the BRT Statement;
- BRT Companies continued to pay directors compensation that strongly aligns their interests with shareholder value.
When Business Leaders Endorse Stakeholder Responsibility, What Are They Really Saying?
By: Timothy Taylor – Journal of Economic Perspectives
Could COVID be a game changer?
The pandemic brought into sharp focus the huge inequities between the wealthy and the working classes and also highlighted how the prevailing lean supply-chain model has left corporations with no resiliency. Stakeholders are watching now more carefully!
The latest BRT statement on corporate purpose will not, by itself, cause corporations to behave in the public interest. But I believe that rhetoric matters because it exposes the signatories of the BRT statement to shame if they fail to follow through. At the very least, it helps to remove an excuse they have had over the last few decades for behaving badly.
Two Years After the Business Roundtable Statement: Pointing in the Right Direction
By: Margaret Blair – Vanderbilt University
