A group of 181 chief executives from some of the world’s largest corporations have signed a joint statement of purpose, committing them to delivering value for all stakeholders.
In addition to generating long-term value for shareholders, the companies pledge to deliver value to customers, invest in their employees, deal fairly and ethically with their suppliers and support local communities.
A symbolic document, the joint statement was announced on 19 August by Business Roundtable, a non-profit association.
“This new statement better reflects the way corporations can and should operate today,” said Alex Gorsky, chair of the board and chief executive 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.”
Not all members of Business Roundtable signed the document, with seven declining to put their names on it. State Farm, a mutual insurer, abstained from signing on the grounds that it has no shareholders.
Under fiduciary duty, CEOs of corporations have a legal obligation to protect shareholder interest.
Commenting on the statement, Doug O’Brien, chief executive of US co-op sector body NCBA Clusa, said co-ops are still the main enterprises contributing to building an economy for all.
He wrote: “As a member of the co-operative community, I read this statement with some optimism, curiosity, and a dose of cynicism: Optimism because it is good to see more of the business community joining co-operatives in realising the need for businesses to help create a more inclusive economy; curiosity as I wondered why it took so long; and cynicism because I doubt that the C-Corporation model is an effective vehicle for this goal given the overwhelming policy environment that suggests the continued priority toward institutional investors.”
Mr O’Brian encouraged those considering the interests of a broader array of stakeholders to look at what co-operative businesses were doing. “These businesses are owned, controlled, and benefit the people who use the business” he wrote. “Because of this, co-operatives tend to keep more wealth local and reflect the values of the people who use the business – rather than institutional investors.”
He said co-operative business models had helped farmers cope with industrialisation challenges in the 20th century, enabled rural communities to bring electricity to the farther reaches of the country when for investor-owned utilities refused to do so and allowed people to control their own financial futures and keep more local dollars in their community.
“Co-operatives have been used for generations and have gone to scale in empowering people in their businesses and communities,” he wrote. “Now is time to look at how this business model can help empower people and communities in the future.
“Co-ops are poised to help tackle the challenges facing this nation and the globe, such as inequality, climate change and the sometimes-negative influence of information technology on our work and lives.
“We think it’s nice that leaders from the biggest corporations have recognised the dissatisfaction with the status quo. We know that co-ops are a key strategy to empower people and communities in building a more inclusive economy,”