It is hard to believe that it’s been 5 years since the Business Roundtable made up of 181 CEOs issued its new statement on corporate purpose. At the time they declared their commitment to lead their companies for the benefit of all stakeholders, not just shareholders.
On August 27, 2019, we posted a blog summarizing that, “The Statement was signed by 181 CEOs who in writing committed to lead their companies for the benefit of all stakeholders, not just shareholders, but ALL STAKEHOLDERS – employees, customers, suppliers, communities and shareholders”. Read more of the initial summary.
We felt then and believe now that the B-Corp movement could spearhead the process. Our initial blog included a quote from the B Lab co-founders,
“People want to buy from, work for, and invest in companies that serve a higher purpose than maximizing profit at any cost to people, communities, and the natural world on which all life depends. People are demanding a new social contract between business and society in which business and the capital markets create long-term value for all stakeholders. People are demanding it, in part, because they’ve seen a credible alternative in the B Corp movement that is leading the transformation from 20th-century shareholder capitalism to 21st-century stakeholder capitalism.”
Based on current research summarized in an HBR article, since the initial signing ‘stakeholderism’ has gained wider acceptance and helped many leaders see the value of taking the interests of their stakeholders seriously when planning, developing strategy, making decisions, assessing risks, and allocating resources, as examples.
However, stakeholderism has not replaced shareholder capitalism as the primary principle for U.S. corporations and there has not been a substantive change in what we would call social sustainability. According to the article, much more is needed to move from a revelation to the way business is conducted including,
- Clearly defining what stakeholderism is,
- Strengthening the theoretical foundations,
- Developing an implementation playbook with guidelines and metrics for measuring performance,
- Partnering with agencies (such as the B Lab) who can spearhead this movement, and
- Embedding the ideals within the corporate structure and culture.
In their article supporting stakeholderism, Paul Polman and Andrew Winston, emphasize that serving only shareholders overlooks a fundamental reality: business leaders have to please customers, attract and retain talent, and work with communities and suppliers to create valuable enterprises.
The authors noted that, “Long-term resilience and business survival depend on sustainably serving stakeholders and society. Business cannot thrive on a damaged planet with unhealthy people”.
In other words, the very foundation of success depends on truly caring about social sustainability (Supporting Sustainability Initiatives). This means leaders with a primary value of ensuring a safe and sound workplace and community.
- A culture where employees thrive and flourish,
- All dimensions of well-being and safety are fostered, and
- Leadership qualities are developed and cultivated.
Only then will corporate CEOs and Senior Executives be able to fulfill their commitment to lead their companies for the benefit of all stakeholders, not just shareholders.
For this to be executed, all stakeholder voices must not only be heard, and listened to, but know that their voice matters and is essential.
- Employees,
- ESG Investors,
- Society/Communities,
- Customers,
- Consumers, and more.
The article also stressed the need to truly assess the costs of staying silent in the face of attacks on human rights, and ESG initiatives.
The signing was momentous five years ago. The excitement and support were palpable then. Steps have been taken, but much more is needed to fulfill this movement. Stakeholders are not fooled by greenwashing and lack of meaningful corporate change toward social and environmental sustainability.
It takes more than merely signing a commitment or displaying posters. The time is now to begin the process of meaningful change. Take simple steps that will have significant and transformational outcomes.