Current Events > The Business Industry says it's changed its mind about shareholder value

(+) Yeah! (+)

https://www.marketwatch.com/amp/story/guid/258F2B82-C286-11E9-9538-6E83F87223DC

The heads of nearly 200 U.S. companies said Monday they are committing to a move away from the idea that the main purpose of a company is to maximize shareholder value, marking a break with a long-held conviction.

The Business Roundtable, a group of chief executives that was formed to promote pro-business interests, said it is shifting its statement of the purpose of a corporation to include all of its stakeholders, including employees, suppliers and broader society.

The group, which is currently led by JPMorgan Chief Executive Jamie Dimon, previously promoted the idea made famous by economist Milton Friedman that companies primary purpose is to reward shareholders.

While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all our stakeholders, the CEOs wrote in a joint statement.

The group is now committing to delivering value to customers, investing in employees in ways that go beyond financial compensation to include training and education to ensure their skills are kept up to date, and embracing diversity and inclusion, dignity and respect.

The group is also committing to dealing fairly and ethically with its supply chain, supporting the communities in which they operate and generating long-term value for shareholders, who provide the capital companies need to invest and grow.

Each of our stakeholders is essential, said the statement. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.

The announcement comes at a time when business leaders and others have started questioning the role the companies they run play in the broader economy. JPMorgans Dimon, for example, has long argued for an end to the divisive politics that are failing to address a range of issues from income inequality to racial and gender issues, stagnant wages, lack of equal opportunity, immigration and health care.
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To be sure, not every member of the Business Roundtable signed the letter. The signatories can be viewed here.

The companies and leaders who chose not to sign include Wells Fargo & Co., Kaiser Permanente led by Bernard J. Tyson, Blackstone Group Inc. led by Stephen A. Schwarzman, General Electric Co. led by Larry Culp, Conduent Inc., Parker Hannifin Corp. led by Thomas L. Williams, State Farm led by Michael l. Tipsord and Alcoa Corp. led by Roy Harvey.

I guess they're gonna be good now. That settles that.
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i wont hold my breath
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Stakeholder analysis has been a part of corporate governance for at least a couple of decades. The words are fine, but what matters is how this is actually put into practice. So long as boards are still chosen by shareholders, shareholder interests are going to come first.

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The Admiral posted...

The words are fine, but what matters is how this is actually put into practice. So long as boards are still chosen by shareholders, shareholder interests are going to come first.

When you're right, you're right.
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"The Business Industry"

Representing all of business.
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