
Statement on the Purpose of a Corporation - neolander
https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans
======
wiremine
You can be cynical about this, and a healthy amount of skepticism is warranted
given the authorship.

That said, it would be interesting (healthy?) to discuss/debate the merits of
the actual statements:

* 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.

Curious where people thing they are wrong or incomplete.

~~~
RockIslandLine
"This starts with compensating them fairly and providing important benefits."

So 51% of corporate profits are reserved for the employee bonus pool? And all
employees are eligible for said bonuses?

It's not hard to come up with examples of where this fails. Don't give me
aspirational pie in the sky. Give me operational policy.

~~~
ohthehugemanate
> Don't give me aspirational pie in the sky. Give me operational policy.

See, there are three layers of decision making: vision, strategy, and tactics.
You set large aspirational goals first (eg Microsoft "empower every person and
organization on the planet to achieve more"), then smaller component
strategies ("build the a cloud provider that integrates business intelligence
into everything you do"), then the concrete actions to make those srrategies
happen ("integrate Active Directory authentication into kubernetes RBAC"). One
"vision" level statement spawns many, many "tactics".

When you're dealing on the level of "181 CEOs" from huge companies as diverse
as JP Morgan Chase, Johnson & Johnson, and Ford, it is impossible to talk
about tactics and strategy. What Ford can do to better serve long term
interests of all stakeholders is too different from what Vanguard should do.
You are only able to agree on the big vision, and let the units (or whatever
smaller more homogeneous group makes sense) work out the strategy level and
below.

This is leadership 101 stuff. There are several models of decision-making, but
they are all hierarchical in this way. You won't find many media outlets
pushing a collective of 181 companies to issue a single press release about
the exact on the ground tactics they will all implement, because in this field
that's a nonsensical request on par with "but how many packets can apache
serve?"

~~~
whatshisface
Why would all of these CEOs from random companies even be in the same room? In
a free market leadership doesn't exist that high, companies aren't _supposed_
to coordinate at that level.

~~~
dsr_
In the USA most companies and corporations are effectively feudal. This is a
meeting of dukes and earls attempting to avoid a socialist revolution through
coordinated PR, which has been quite effective for the last 75 years or so.

Note that most public companies have institutional investors as the largest
component of their ownership; such investors tend to own all the major
competitors.

GM: top 5 are Capital World Investors, Vanguard, BlackRock, Berkshire
Hathaway, and Harris Associates.

Ford: top five are Vanguard, BlackRock, Newport, State Street, Franklin.

Fiat-Chrysler: top five are Tiger, Harris, Baillie Gifford, Vanguard, Deutsche
Bank, FMR.

Looks like Vanguard is certainly in a position to encourage the big-three car
manufacturers to work together.

Intel: Tiger, Harris, Baillie Gifford, Vanguard, Deutsche Bank.

AMD: Vanguard, BlackRock, Wellington, FMR, Invesco.

Your CPU choices will make money for Vanguard.

HPE: Dodge&Cox, Vanguard, BlackRock, Primecap, State Street.

Dell: Temasek Holdings, Dodge&Cox, Elliott, BlackRock, Vanguard.

Apple: Vanguard, BlackRock, Berkshire Hathaway, State Street, FMR.

When you buy computers, you make money for Vanguard.

In summary, Tim Buckley at Vanguard can set up a meeting with any group of
CEOs at minimal notice. He doesn't actually own much of anything, but the
right of ownership for a large percentage of the USA's economy is a thing that
he directs.

Or maybe it's Robert Kapito at BlackRock; same deal.

~~~
anthonypasq
> but the right of ownership for a large percentage of the USA's economy is a
> thing that he directs.

Umm, no. Unless you have a very different idea of what "large percentage"
means.

~~~
JetSpiegel
[https://duckduckgo.com/?q=vanguard+divests&t=ffab&ia=web](https://duckduckgo.com/?q=vanguard+divests&t=ffab&ia=web)

He does direct investment.

------
AtlasBarfed
Wake me up when I can use such a statement as a means to legally coerce
corporations into compliance with existing laws, to say nothing of the exigent
environmental threats facing the world.

Literally every CEO would laugh at this statement in the privacy of their
office, while they engineer stock manipulation to trigger their stock options
and retire in 5 years.

It's like an ethics in business class at MBA schools. It's window dressing.

Of course the political donations of the signers of this document, which is in
all likelihood:

\- non-binding \- has no monetary commitments \- involves no policy
commitments contrary to their revenue streams \- addresses no previous
examples of bad behavior by the companies, nor any pledges to ameliorate those
impacts

The political donations from these entities most assuredly will point to the
exact opposite motivations.

~~~
mlyle
"Literally every". I don't think it's fair to tar every business owner and
executive with this brush. Yes, there's unethical people, and it's way too
common in this business environment. But there's also plenty of businesses
that do their very best to treat customers, employees, suppliers, and
shareholders with respect and fairness.

~~~
throwaway2048
The issue is the more prevalent this stuff becomes, the more the bad drives
out the good. Its the same argument about corrupt police departments, all the
good cops either leave, or are forced out by their corrupt co-workers.

~~~
mlyle
That's a different argument and doesn't rely upon hyperbole.

Yes, I've felt pressure in the business environment to do questionable things
because my competitors were doing them.

------
basseq
From today's _Money Stuff_ by Matt Levine[1]:

 _> So when an association of big public-company CEOs gets together and
declares that corporations should serve the community, take care of the
environment, and be responsible to employees and customers, not just
shareholders, that might be because the CEOs have thought it over and decided
that employees and the environment are getting a raw deal, but it is also
possible that the CEOs have thought it over and decided that shareholders are
annoying._

[1] [https://www.bloomberg.com/opinion/articles/2019-08-19/we-
loo...](https://www.bloomberg.com/opinion/articles/2019-08-19/we-looks-out-
for-our-selves)

~~~
newshorts
Right.

I’d find it annoying if I exceeded expected earnings and my stock price falls
because I didn’t hit my insane 20%+ growth expectation.

I’m not sure they will find employees any less annoying, but at least you can
fire them...

------
n-exploit
If corporations want to make a real change and provide value to all
stakeholders, they will need to develop a practice to systematically eliminate
all negative externalities (risk) being transferred to society. Unfortunately,
the current regulatory environment still makes this illegal/impossible, given
that executives are still legally bound to create value for shareholders.

The thoughts and feelings of these CEOs mean nothing unless it's
predicated/followed by regulatory change.

~~~
skybrian
This supposed legal requirement is a myth. Managers have a lot of leeway in
how to justify their decisions as somehow related to corporate interests. The
company lawyers are not going around warning managers that if they don't
pursue shareholder value, they are putting the company at _legal_ risk. It's
not something regulators care about. Company training courses warn employees
not to do various illegal things that could get the company in trouble, but
failure to pursue shareholder value isn't one of them. (The closest thing
might be spending corporate funds on yourself instead of legitimate business
expenses.)

The pursuit of shareholder value is more of a cultural norm. Top management
and many employees have stock or stock options, so naturally everyone is happy
when the stock goes up. Increasing revenues and profits are almost always
rewarded. This is all justified as aligning employees' interests with
shareholder value.

The article shows that some companies might be moving away from this a little
bit. In practice, employees are people who can be motivated by beliefs other
than what personally benefits them, and the statement provides a bit of
philosophical cover for that. But I expect that growth will continue to be
considered good.

~~~
bdamm
The statement is great, and meaningful. Hopefully it's a shot of ethics into a
somewhat moribund patient. However there are competitive forces also at play.
A company that doesn't boost it's stock price as much as its competitor is at
a competitive disadvantage because now it has access to less capital.

If we're really lucky, someone has found a way to objectively value the
goodwill generated by taking good care of their customers, employees, and
partners. Or perhaps that already existed, and the metric has moved into
favoring good behavior for some reason, so these CEOs are agreeing to move
together into this new operating theater so they can take maximum advantage of
their existing customer base and spend less on churning customers.

~~~
skybrian
It seems like you're approaching this as if businesses are maximizing a
function, and that doesn't seem to be how managers make decisions in most
places? Competition is important but there are a wide variety of strategies
and they are already weighing intangible tradeoffs without necessarily
quantifying everything.

~~~
bdamm
Not all managers make good moral or financial decisions, but many do. The very
best manage to make both at the same time.

------
GCA10
Way back when, I used to do some volunteer work for the Better Business
Bureau, which put out similar messaging in regard to everyday consumer
complaints. It also was a business-funded group that, in hindsight, tried to
accomplish three things:

1\. Letting companies feel good about themselves

2\. Providing something worthy sounding in the public eye that might defuse
"bad publicity."

3\. Doing a bit of investigation and complaint resolution in connection with
the scummiest 5% of businesses, which often weren't members. Moral outrage? A
desire to kneecap the most difficult competitors? Probably a bit of both.

I'll agree with earlier posters who are a bit cynical about all the factors
listed in Reasons 1 and 2. But Reason 3 shouldn't be overlooked. I don't think
the Business Roundtable will suddenly be concerned about how Exxon, Walmart,
etc. make their money or deal with customers, employees, suppliers, etc. On
the other hand, odds are good that they will take a stand against small-time
chicken processors, toxic-waste dumpers, etc.

Back in my BBB days, we did some real work to crack down on fraudulent
apartment-referral outfits, which not only ripped off newcomers to New York
City, but also made life ugly for the mainstream realtors, building owners,
etc. that were BBB members.

Even if such battles may seem like grandstanding, they can be of some use.

------
cs702
This new purpose stated by the CEOs of America's largest corporations is _a
welcome change_ to the corporate ethos that has prevailed in the US since the
"greed is good" days of the 1980's. It is also a _preemptive response_ to the
growing popularity of politicians like Bernie Sanders and Elizabeth Warren.

~~~
cryoshon
it's way too late.

the time for this was back in 2011, when the populist politics were first
rearing their head on a national scale. now, it reads like a belated non-
apology for past maliciousness. and it won't save them from the rising tide.

~~~
defterGoose
I think the phrase "crocodile tears" was developed specifically for situations
like this. Viva la revolucion.

------
ckastner
> _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. With today’s announcement, the new
> Statement supersedes previous statements and outlines a modern standard for
> corporate responsibility._

At first glance, this seems like a terrific move. In recent decades, this
trend of shareholder primacy has been more than evident. CEOs are expected to
lead their companies to more and more performance quarter by quarter, rather
than focusing on the long-term prospect -- sometimes even at the cost of it.

Let's hope that this "shareholders first, at all costs" mantra finally dies.
There's more than one dimension to success, especially future success.

------
strenholme
My father is from a generation where, from the day he got hired to the day he
retired, 45 years later, he worked for the same employer. That changed in the
1990s.

That changed in the 1990s because companies no longer valued long term
commitments. The famous example is IBM laying off, in bulk, countless long-
term employees in the interest of increasing their bottom line.

The only way I was able to get a pay raise in the tech industry was by
changing jobs. Once I figured that out, I changed jobs about once a year to
triple my salary. On the way of doing this to climb the corporate ladder, I
saw a lot of unethical behavior:

I saw countless dot-com startups dissolve after all of the executives gave
themselves as big of a golden parachute as possible; I had consultants tell me
to put experience I never did on my resume; I saw a company closing shop
without paying their employees their final paycheck; I saw (and still
sometimes see) hucksters promising good work and “exposure” but saying they
could not pay you “for the time being”; I see companies demanding extensive
experience (the infamous “ten years of React” job posting -- keep in mind
React has been around for under seven years) but never offering on-the-job
training; I have seen people who have developed injury or disabilities
interfering with their work being “laid off” without warning; I have seen big
tech companies refusing to hire anyone outright and cut off contracts short in
the interest of maximizing CEO pay and shareholder value.

In short, I have become cynical about the tech industry and how it treats
employees. Sure, it’s a living wage, but they won’t hire you if you mention
“work life balance” during the interview; they expect long hours from their
employees and expect the company to become their passion or life. No wonder
why fewer people in America decide to give birth to and raise kids; it’s just
not possible with the insane hours tech companies expect from their employees.

Yes, I’ve become quite cynical about the tech industry. It chews up workers
and spit them out. The happiest memories of my life are not being in some
cubicle in some office making too much money, but the times in my life when I
took a break from tech and supported myself as an English teacher in another
country, and had time to actually make real world friends and be able to date
normally. Those are the times I cherish; that and the time I spend with my
beautiful daughter.

~~~
clairity
> "That changed in the 1990s."

it really started changing (slowly) in the 70s as a reaction to the free-
wheeling 60s. 1980 was the major inflection point with ronald reagan's
election as president, which ushered in trickle-down economics as national
dogma.

------
egypturnash
How many of these corporations are putting their money where their mouth is
and enshrining this in their charters, bylaws, and official procedures?

How many of these corporations are putting their money where their mouth is
and lobbying lawmakers to make these things mandatory for all corporations?

How many of these corporations are putting their money where their mouth is
and putting money into raising the minimum wage?

Money talks, bullshit walks.

------
jonwachob91
>>> “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.”

Oh the irony...
[0][https://www.forbes.com/sites/rachelsandler/2019/07/12/johnso...](https://www.forbes.com/sites/rachelsandler/2019/07/12/johnson
--johnson-under-criminal-investigation-for-concealing-cancer-risks-of-baby-
powder/#de739bd66e73)

[1] [https://www.theguardian.com/us-news/2019/jul/24/opioids-
cris...](https://www.theguardian.com/us-news/2019/jul/24/opioids-crisis-big-
pharma-drugs-carnage)

------
mauld
These sorts of statements always scare me a bit. First, businesses are still
required to give maximum benefit to shareholders.

Second, even if this was the goal of a business, it then leaves it up to
businesses(boards?, CEOs?) to define things like "ethically", "important
benefits", "diversity" etc. These aren't things you could get all people to
agree on in the first place- hence the whole democracy thing we do. A lot
easier to make these statements then turn them into policies.

Let businesses do what they do best - give them a set of constraints (laws)
and let them maximize value. If they do "good" things as well, great, if not,
fine. If we don't like the outcomes (environmental damage, inequality) change
the rules to change the value equation.

~~~
afthonos
Gestures like this, sometimes even coupled withe genuine action, are what
businesses do to avoid those explicit constraints being created. "Look, we're
being reasonable, no need to force us to."

------
dougmwne
_...it is a tale Told by an idiot, full of sound and fury, Signifying
nothing._

Public corporations are not going to stop being paperclip maximizers until we
legally and economically force them to stop. This is absolutely nothing but an
attempt to divert public anger away from any new regulation that would force
companies to deliver more value to society and less to shareholders. Sadly, no
different than greenwashing.

~~~
stale2002
No legal changes are needed. Companies are controlled by the shareholders.

Shareholders can, at any time, decide to replace the CEO with someone who will
"do good" or whatever.

So if people want to change a company, what they have to do is simple. Buy out
the shares, and get majority control, and then make whatever changes that they
want.

~~~
dougmwne
The sp500 market cap is 24 trillion USD. It definitely sounds easier to
legislate better corporate citizens than to spend at least 12 trillion buying
them out, if it were even possible.

~~~
stale2002
My only point that I am making is that this idea of "corporations have to
maximize profits" is false.

Shareholders own the business. And they can do what they want with it.

It is a total lie to say that they "have" to maximize profits.

------
wpasc
I find the prospect of this translating into actual action is dubious.

------
perlgeek
Do you want every American to benefit from your corporation? Spread >50% of
shares (with voting rights) to every American, and make sure they have an
efficient way to pool their votes, and are represented on the board.

Want your corporation to be environmentally friendly? Give a significant
amount of shares (again, with voting rights) to an environmental NGO.

Yes, that means giving up control, but it will work.

------
danans
> We commit to deliver value to all of them, for the future success of our
> companies, our communities and our country.

Without regulation, what is the mechanism to ensure that they comply? Public
shaming? Survivor guilt?

Instead, how about bringing the stakeholders (starting with non-managerial-
employee representatives) for these objectives onto the boards of directors?

------
foolinaround
Anything that is as subjective as this cannot be enforced, and the CEOs will
have a cop-out stating that they focussed on "other outcomes" and declare
victory.

------
mattmcknight
I think the final point is where there is the most leverage- giving preference
to long term ownership interests over short term interests. Time based voting
preferences, longer minimum holding periods for manager stock grants, more tax
differential on long and short term gains and similar policies have potential
to create an environment which is not as focused on the daily stock price and
the quarterly numbers. Having the company serve the purpose of its owners is
not a bad thing, otherwise the concept of ownership is meaningless, but if the
intention of some of those owners is to briefly increase its value or
liquidate assets to increase short term returns at the expense of longer term
returns, that seems worthy of disincentivizing.

------
FabHK
I think that's great. This notion that corporations exist solely to maximise
shareholder value is a neat solution for some real problems (principal/agent)
in a neat theoretical setting, but not a necessary fact of life, not a
sufficient solution in the messy real world, and should certainly not be
dogma.

Now, whenever there's a discussion about what some company should do, and some
free market devotee repeats the mantra that the company should just maximise
shareholder value, one can point to this.

If hundreds of CEOs agree that the purpose of a corporation is a bit more
complex than shareholder value maximisation, then the discussion can proceed
to the hard part (how to trade off the different objectives and interests
optimally).

------
thanatropism
In Richard Powers's novel GAIN, there's a scene where the CEO of a Johnson &
Johnson type conglomerate tries to write down what's the purpose of a
corporation:

"To make a profit. To make a consistent profit. To make a living. To make a
profit in the long run. To make things. To make things in the most economical
way. To make the greatest number of things. To make things that last the
longest. To make things for the longest possible time. To make things people
need. To make things people desire. To make people desire things. To give
meaningful employment. To give reliable employment. To give people something
to do. To do something. To provide the greatest good for the greatest number.
To promote the general welfare. To provide for the common defense. To increase
the value of the company stock. To pay a regular dividend. To maximize the net
worth of the firm. To advance the lot of all stakeholders. To grow. To
progress. To expand. To increase knowhow. To increase revenues and decrease
costs. To compete efficiently. To buy low and sell high. To improve the hand
humanity has been dealt. To produce the next round of technological
innovations. To rationalize nature. To improve the landscape. To shatter space
and arrest time. To see what the human race can do. To amass the country's
retirement pension. To amass the capital required to do anything we want to
do. To discover what we want to do. To vacate the premises before the sun dies
out. To make life a little easier. To build a better tomorrow. To kick
something back into the kitty. To facilitate the flow of capital. To preserve
the corporation. To do business. To stay in business. To figure out the
purpose of business."

------
elihu
I took a look at the signatories. Surprisingly, Amazon and Apple are on there.
Microsoft, Facebook, Google, Intel, Nvidia, AMD, and IBM are not.

[https://www.businessroundtable.org/business-roundtable-
redef...](https://www.businessroundtable.org/business-roundtable-redefines-
the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans)

(edit: removed text accidentally pasted in)

~~~
ramshorns
I didn't know who Business Roundtable was.

[https://en.wikipedia.org/wiki/Business_Roundtable](https://en.wikipedia.org/wiki/Business_Roundtable)

They're a group of CEOs that has lobbied against union protections, against
antitrust legislation, and against increased powers for shareholders over CEOs
and boards. So this seems like a bit of a departure from their usual policy,
unless the real goal is to transfer power from shareholders not to the general
public but to the CEOs and boards.

~~~
elihu
In that case, it may reflect well on a business if their CEO didn't sign
because they weren't member in the first place.

They have a list of members here:

[https://www.businessroundtable.org/about-
us/members](https://www.businessroundtable.org/about-us/members)

So far, I've just found one company among the non-signatories I listed whose
CEO is a member (Virginia M Rometty of IBM).

Micro, Qualcom, Oracle, Comcast, and Texas Instruments' CEOs are also member-
signatories.

------
zentiggr
Instead of effortless PR statements like this, let's have a Fortune
-5/-10/-50/-100/-500 of the costs companies have incurred from pollution and
resource consumption and let everyone claw to the top of the "least bad" pile.

Keep your propaganda, take action and let that speak for you.

(Yes, I'm aware that can be gamed like any other metric. At least it involves
concrete changes, not just a fluff piece.)

------
simonebrunozzi
It's "funny" to read about this, as in my spare time this past weekend (and
sparely for a number of months now) I was thinking about creating a non-
profit/foundation focused on "reducing the environmental impact" of workers by
10x, as a way to combat climate change. The basic idea is to have companies
"pledge" to vastly reduce the overall environmental footprint of their
workers, either by direct action, or by buying or investing in initiatives
that provide the same effect (a-là buying carbon credits to offset CO2
emission).

I don't feel ready to discuss it in greater details; however, if any of you
has experience in setting up non-profits and/or foundations (I am based in San
Francisco), I would love to talk to you.

Also, if any of you think it's a great idea, feel free to ping me.

MyHNusername at gmail.

------
golemotron
It's a nice statement but as long as shareholders can sue corporations for not
maximizing value regardless of externalities, the purpose of a corporation is
defined _de facto_ rather than _de jure._

Joel Bakan's book _The Corporation_ (and the documentary of the same name) lay
out this case well.

------
jackcosgrove
I don't see anything changing as long as short-term decision-making is
incentivized. Executive shares should vest according to some multiple of the
average tenure of a company in the S&P 500. If the multiple is 1, that means
you need to beat the average to own a share of a company you manage. Tying it
to the market average calibrates this schedule to the pace of company turnover
due to external factors, such as population growth, technological change, etc.
I'm not proposing a legal framework beyond requiring that these norms be
promulgated and individual companies required to report the terms of share
grants to management. Let investors make decisions armed with this information
and enforce the norms that way. Maybe some form of this is already normal; I'd
be curious to know.

------
amw
It feels an awful lot like the people putting out this statement want to
position themselves as the actual driving force behind the focus on
shareholder value in the 80s, and thus use that branding to also posit an
authority to change future corporate governance in a way that accommodates the
current political climate. It's absurd to think that they would have that kind
of power, but that aspect of it is probably harmless in the long run; I think
the bigger concern is how this statement can be used and incorporated as a
bigger vision for governance that appears to address fundamental problems with
the way our economy is run without actually addressing them, much the way a
focus on plastic straws lets people feel like they're addressing ocean plastic
without actually addressing it.

------
musicale
I've never been a fan of the idea that "the company's only purpose to deliver
value to its shareholders."

So I'm glad that they call out additional stakeholders and put customers and
employees at the top of the list. Customers who are willing to pay for some
useful good or service and employees who are willing to do a good job
delivering it also seem like pretty essential ingredients for a successful
business.

Externalities are a real thing, so I'm glad they mentioned local communities
and the environment.

However, there may be external effects on global communities as well. For
example, Facebook delivers value to its customers (advertisers) but causes
harm to Facebook users.

There are also companies that harm their customers directly, in spite of
customers paying for the "value" that they deliver.

------
zemo
So many of the reactions seem to be "I don't believe it, they don't care,
they're evil", but that doesn't strike me as being particularly useful or
realistic, because it misunderstands one very important fundamental human
dynamic: the vast majority of villains think that they are the hero. Much harm
is caused by those that don't understand that they are harming others. Many
that knowingly do harm think that their doing harm serves a higher, more
important purpose that, in fact, demands they continue that pattern of harm.
Leaders of all stripes do things that are harmful, believing that the ends
justify the means and that they are in fact doing good by doing harm.

This statement helps empower employees to say to illustrate to their corporate
leadership that they are not, in fact, doing such a great job of being good
guys. I have personally gone to managers that I work for and said "I think we
need to invest in our employees more" and been told "we're not in the business
of growing our employees". I've had managers that state that have demonstrated
wanting the things that I want but refusing to act on those wants because they
believe that those wants are selfish and immature, and that acting counter to
their actual desires is a form of discipline that serves a higher purpose.
Many believe this is good management like making your kid eat their vegetables
in spite of their protest is good parenting.

For example, I have been in positions where I wanted to move on from old
technologies and reported to engineering managers who also wanted to move on
from old technology. I've even seen them demonstrate this by learning the
newer tools and building side projects with them. Those same managers still
could not be convinced to go to bat for the newer tools because they do not
believe that they have a mandate to help their employees grow. I've personally
seen leadership and especially middle managers make decisions based solely on
the statement of shareholder value and ask how, for example, modernizing
tooling helps shareholders.

This document strikes me as incredibly helpful to workers in the position that
want to advocate for their own career growth. If you agree with these
principles, do not look on it with skepticism. Instead, view it as a tool in
your own arsenal that you can use to advocate for positive change in your own
org.

------
Bhilai
I wonder if this is in response to a common narrative (by politicians) that
corporate America is essentially screwing everyone and has gained immense
control over every aspect of life.

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cestith
This has been a long time coming. Short term profits as the only goal has been
destroying the market rather than serving it. It's time to make lasting
investments in pooling capital, human ingenuity, and goodwill to build
corporations that can stand the test of time.

It remains to be seen how seriously this will be taken and how closely
companies will follow it. However, giving any benefit of the doubt makes this
likely the best news we'll hear about anything for some time.

------
socrates1998
This seems like a good step in the right direction. I think what really needs
to change is the legal system. There is way too much protection of
corporations via liability.

It's so easy for corporations to completely screw over the public, make a lot
of money, then go out of business when they public wises up to it.

There are tons of examples throughout America of this. Mining companies are
probably the worst.

The legal system needs to catch up this.

------
kolbe
This is a wonderful opportunity for entrepreneurs.

While Larry Fink pushes his social agenda on the companies he controls,
leaders of private companies, whose stock is largely owned by investors with
"skin in the game," will flourish.

------
bdowling
The purpose of a corporation is to allow passive investors to own part of a
business and share in its profits without risking more than their investment.

That's basically all there is to it.

------
theandrewbailey
Am I the only one who noticed that there are no references to 'consumers'?
There's plenty of 'customers'. I'd like to see more of that, too.

~~~
aodin
What distinction are you making between the two?

~~~
theandrewbailey
'Consumer' is a cold, impersonal word. 'Customer' hints that there's a human
on the other end.

My web service client is a JSON consumer, but I'm a store's customer. It
doesn't work the other way.

~~~
aodin
I read your original comment as you _wanting_ more references to 'consumer',
which, of course, I found a bit odd.

------
wanche112
This is terrific move by the CEOs. Why most of Hacker News readers are so
synical about the statement. It is true that at the end, CEO's fundamental
purpose is still on generating values to shareholders. But this statement
signals a change in its way to achieve it: focus on customer, and employees
with long term perspective, instead of short term stock market gain. The
statement says CEO can do actions that can be harmful to stock, but still do
it for the benefit of customers and employees, because they believe in it is
good for the long term and us economic as whole. I see this is very positive
statement.

~~~
throwaway2048
change requires actions, not words, especially not words as subjective,
hypothetical and open ended as these.

These corporations could start doing better, today, without a round of self
congratulation about how they are gonna make tomorrow better first.

------
raygelogic
this is significant when you consider historical context. this was a common
view held in the 50s, but over time, maximizing shareholder value over all
stakeholder value became the dominant concern. it's good to see the intent
swinging back. sure, it's just words right now. when we see worker salaries
grow to take up a larger piece of the pie, we'll know they mean it.

------
SantalBlush
Are they trying to get ahead of government regulation with this? It looks like
a declaration of self-regulation to me.

If they really intend to switch gears and prioritize other stakeholders, that
may require some enforceable agreements among them to prevent competition from
causing a race to the bottom, and I wonder if such agreements would be legal.

~~~
naravara
>Are they trying to get ahead of government regulation with this? It looks
like a declaration of self-regulation to me.

I think it's more a bit like the Henry Ford deal where he insisted on paying
his workers enough to actually be able to afford the cars. Anemic demand is
one of those things that can get an economy stuck in a low-growth poverty
trap.

Either that or they're trying to get ahead of the guillotines.

~~~
zanybear
My impression is the last sentence - self preservation. With the threat of
automation, they can see the pressure mounting on finding solutions that do
not result in unions or pitchforks.

~~~
milofeynman
My assumption is that all the union talk and action in the last few months has
board members scared and they want to put on a show to employees that they're
doing stuff to make things more fair, in order to push off folks unionizing.
Growing inequality...

------
OliverJones
This statement is a valid response, half a century on, to this statement by
one Milton Friedman that the social responsibility of the corporation is to
shareholders alone.

It's worth reading Friedman's September 1970 article.
[https://web.archive.org/web/20060207060807/https://www.color...](https://web.archive.org/web/20060207060807/https://www.colorado.edu/studentgroups/libertarians/issues/friedman-
soc-resp-business.html) It's been around since shortly after the UNIX epoch!

It's wise to read critically the motives of some of originators of the
Business Roundtable statement. Nevertheless it's an important response to the
Friedman Doctrine. If businesses like Jamie Dimon's even consider adopting it,
it's a consequential change.

------
CivBase
In what way are businesses incentivised to act on this statement?

(genuine question)

~~~
wanche112
Long term prospect

------
jfig
i stopped reading at "all americans"

------
ptah
they must all feel good about themselves now as they return to business as
usual the very next day

------
koonsolo
As a business owner, I was already scared that they would reveal our unfair
advantage. Good thing they do as usual, and keep the focus on non relevant
things that keep the masses pleased. Pfew!

------
a3n
"Shareholder value" will always be prime, when the CxOs, drivers of corporate
direction, are major shareholders.

------
dev_dull
Corporations are just people, the same as countries are just people. To think
that they operate apart from the decisions of their leaders and members is
just silly. There aren’t “good” and “bad” corporations. There’s good and bad
leaders and members.

I feel like there’s a strong shift happening in the US away from personal
affect and responsibility and shifting it into legislative and corporate
policies. The self is out of the equation.

The strongest manifestations of this (to me) are the perceived hypocrisy of
proponents of this change. For example believe everyone should pay more in
taxes without voluntarily paying more than the minimum themselves. Insist on
inane doomsday climate predictions but also fight vehemently against nuclear
power and jet travel for vacations without a care. List goes on.

Our problem as a society always seems to be those pesky other people and never
ourselves.

~~~
hn_throwaway_99
If corporations are 'just people', then we should be fine getting rid of all
of the legal fictions that protect these individual people from the
consequences of their actions.

~~~
dev_dull
Completely agree.

------
mempko
People are misunderstanding the purpose of this statement. Everyone is saying
it doesn't have legal teeth. This is true. But that's not the point. The point
of this statement is to signal to the public, that the wealthy are ready to
give them what they want and understand that the inequality is unsustainable.
They are prepared to make concessions now and it's up to the public to take
them.

IMO This is basically a "Go vote for Bernie Sanders" nod from the wealthy.
None of them would say this so directly, except a financier like Asher
Edelman, who explained how his economic policies would lower inequality and
increase the velocity of money.

Read Ray Dalio's Why and How Capitalism Needs to be Reformed
[https://economicprinciples.org/Why-and-How-Capitalism-
Needs-...](https://economicprinciples.org/Why-and-How-Capitalism-Needs-To-Be-
Reformed/)

If you want some accurate reporting, go read the financial and business press.
Turns out business people kind of need to know what is going on to do their
job and are willing to pay for good news reporting. So if you want 'just-the-
facts' reporting, the business press is pretty good.

~~~
excursionist
I think you are misunderstanding the purpose of this cheap PR move.

~~~
mempko
It is a PR move. I'm stating why they are making the PR move. Why even make
the PR move if everything is fine? Why rock the boat if all is well?

~~~
excursionist
What? Corporations have always been spending time & money on PR. Are you
asking what the purpose of PR is? I see no reason to assume altruistic motives
are involved.

~~~
mempko
No. I'm asking you what is the purpose of THIS PR move. Every PR move has a
reason behind it. You suggested I misunderstood the purpose of it. What, in
your opinion, is the purpose of this PR move?

~~~
excursionist
Your statement is wrong because there is no reason to believe or any evidence
to support the following statement:

> The point of this statement is to signal to the public, that the elite are
> ready to give them what they want and understand that the inequality is
> unsustainable. They are prepared to make concessions now and it's up to the
> public to take them.

Corporations suddenly wanting to tackle inequality and make 'concessions to
the public'? That's not a reason for this PR move, that's corporate fairytale.

> I gave a reason for the PR move. I'm curious why you think my reason is
> wrong?

You did not give any reason other than exactly what the architect of this PR
move would expect a very gullible person to interpret this as.

~~~
mempko
Are you suggesting I had the gullible interpretation? If not, what would a
gullible person interpret this as? What action would you suggest is the
appropriate one to this PR move?

~~~
excursionist
> > Are you suggesting I had the gullible interpretation?

Yes.

> What action would you suggest is the appropriate one to this PR move?

When these corporations put their money where their mouth is, we can start to
seriously consider such statements. Until then, laughter and derision are
appropriate.

