In August 2019, the Business Round Table, an association (or lobby group depending on your perspective) of CEOs in America released a statement on the revised purpose of a corporation. In their statement they challenge the orthodoxy of ‘shareholder primacy’ as the principle driver of corporate purpose and argued that corporations need to also deliver value to a wider group of stakeholders including customers, employees, suppliers and communities and the environment; stakeholders whose interests go beyond returns on investment. For these stakeholders, the value created by the company is felt in job creation, tax payment, procurement practices, supporting local communities and developing sustainable practices.
And we agree. Businesses can and have been a ‘force for good’ indeed; shareholder primacy is a relatively new idea, and for many businesses, being part of a community, providing quality jobs, paying tax and responding to the climate crisis all matter. So there is nothing particularly new or radical in what the Business Roundtable is saying. However, what is new is who is saying it. The Roundtable Signatories represent some of the biggest businesses in the world; collectively, they control an estimated $7tn of value. This makes them bigger than most states (including Germany, India and the UK), and they wield a global influence to match their economic one. With size also comes caution: any big organization struggles to move quickly; to produce innovative ideas and radical change rarely comes from the ‘big’ players, be they businesses, individuals or public institutions. But what the big do bring is scale. So, when the Business Roundtable commits itself cautiously to moving beyond shareholder primacy it is worth getting a little excited.
So what’s next? We applaud the Business Roundtable’s talk and also ask “what next?” There is no shortage of suggestions already flying around. The founders of B-Corp have publicly invited the Roundtable signatories to come join the B- Corp Movement and John Elkington of Volans offers six very specific recommendations to help them move to action.
And we add one more.
The members of the Roundtable may be organisations with large turnovers and employee head-counts that run to the hundreds of thousands – their leaders may have Presidents on speed dial – but even they cannot make change alone. The sort of issues the Roundtable seeks to tackle – issues of social mobility, quality jobs and a healthy environment are all issues with no single owner, issues that sit in the spaces between businesses, governments and civil society. These are the sort of issues that will need unconventional partnerships and collaborations to create change. In some ways this should be a relief to the big businesses of the Roundtable – you cannot solve these issues alone, nor is it your sole responsibility to do so. But there is also a challenge in here: if you are serious about delivering real value to all your stakeholders then you will need to leave your board rooms; you will need to form equitable collaborations with organisations that may be unfamiliar to you, you will need to give up control of the agenda and, as the former CEO of Ben & Jerry’s promises or warns depending on your point of view, “you need to be in for the long haul”.
There are already many examples of unconventional collaborations between private sector, government and civil society creating real change, such as the Global Plastics Action Partnership, or Generation Africa (which seeks to reimagine the Agri Food sector in Africa) or GAVI (the Global Vaccine Alliance) some of which already include members of the Roundtable. But we are excited to see how the members of the Roundtable combine the intention of their statement with the power of their scale and the innovation of others. It is this combination that could generate seismic change.