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Corporate Goals
No longer just maximizing profit for stockholders
A week ago, 181 CEO of the United States Business Round Table (BRT)major companies on the change in capitalism: no longer an exclusive commitment to shareholders, but a commitment to all stakeholders (customers, employe
Peter Burgess
A week ago, 181 CEO of the United States major companies on the change in capitalism: no longer an exclusive commitment to shareholders, but a commitment to all stakeholders (customers, employees, suppliers, community, environment). I went out to check with my colleagues, corporate and sustainability specialists, who have a global perspective and historically, is it a true gospel or in hot air only? What they had to say-fascinated me. Welcome to read their opinions in a new article on my blog. Thanks to colleagues: Noam Gressel Elaine Cohen Liad Ortar Raz Godelnik Noga Levtzion Nadan
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Peter BurgessStatus is online Peter Burgess You Founder/CEO at TrueValueMetrics.org developing True Value Impact Accounting
Don't hold your breath that this is going to change anything. There is growing evidence that customers are starting to demand more responsible products, and CEOs have to pander to this reality, but the other reality is that investors remain wedded to the idea that profits and increment to financial wealth is the only thing that really matters. Corporate behavior will be changed by customers ... so the more information we can get to customers about the responsibility of products, the faster there will be corporate behavior change!!!!!!!!!!!!
8h Jonathan Shaked Jonathan Shaked 2nd degree connection2nd * BizOpps Finder; Gateway to APAC * Glad to share Data and Connections *
New capitalism or spirits and rings? Expert opinions
AUG 26, 2019
Author Shirley Cantor , with 2 comments , Category: Corporate Responsibility, Tags: guest article , stakeholders , capitalism
What do sustainability experts and corporate accountants think of the bombastic statement of 181 CEOs and CEOs of major U.S. companies about their new commitment to creating value for all stakeholders and not just shareholders? The worsening social and ecological situation in the US and worldwide Five learned and interesting opinions.
Corporate Responsibility and Sustainability Expert Opinions
Economic media and social networks were thrilled when the US Business Roundtable, which brings together 181 of the country's largest companies, issued a statement on August 19, 2019 regarding the latest US business purpose. Even Globes and TheMarker dealt with and brought the Gospel to Israel - the dusty edge of the Empire (NJ).
What's the novelty and what's the thrill?
Since 1997, every periodic statement issued by the Business Roundtable (a US corporation of 181 senior executives, which collectively manages 15 million employees and an annual turnover of $ 7 trillion) regarding business-worthy corporate governance, claims that businesses exist in principle to serve shareholders This is the classic capitalist approach, which has been radically expressed as the international capital and trade market has evolved.
The current statement, which eliminates the relevance of its predecessors, first addresses other stakeholders, in addition to shareholders. 'While each company serves its corporate purpose, all companies share a basic commitment to all their stakeholders. And these are the commitments:
- * Creating value for customers by meeting their expectations.
- * Investing in employees , first and foremost through fair pay and providing important benefits, as well as through training and education that will enable them to develop skills needed in the new world of work. Diversity, inclusion and respect for one.
- * Fair and ethical relationships with suppliers , large and small.
- * Support communities in which businesses operate by giving respect to people in these communities, and protecting the environment through the implementation of existing (environmentally responsible) practices across all business operations.
- * Creating long-term value for investors . Commitment to transparency and effective engagement with shareholders.
The business sector is on the verge of revoking a license
Commitment to all stakeholders has always been one of the cornerstones of the corporate responsibility approach. This commitment - as a basis for prudent business conduct, received increased exposure in the business audience when Porter and Kramer's article on shared value creation was published in Harvard Business Review in 2011 (an earlier version of the article was published in 2006 but did not receive similar resonance). At the time, America was still licking its wounds following the sub-prime crisis, which created a deep crisis of trust between the Americans and the giant corporations, raising doubts about the ability of the capitalist system to bring growth and welfare to all of American society.
Now, over eight years, business community leaders are adopting this approach to their lives. In the meantime, this is only a statement, with no action plan and measurable goals. However, this is an azimuth change, and an understanding of the change in power relations and the constraints system. Is this enough to make the necessary change?
What do the experts think?
Many discussions and discussions were held about this statement on social networks. I decided to check with experts who have known the field for many years, both as researchers and as consultants accompanying corporations in Israel and around the world, how they see the statement. Is this indeed a conceptual revolution and the beginning of a new era, or is it a balloon filled with warm air? And can this statement really drive the change needed to bring the American economy and society, and this world, into a path of sustainable growth?
Of my colleagues who do not currently live abroad, I received five learned and interesting answers: to Ya'ad Orther, Noga Levzion Naden, Raz Goodnick, Elaine Cohen and Dr. Noam Gressel. While everyone reacted with cautious skepticism, two of them (Elaine and Noam) took a more positive approach to the companies' commitment to fulfillment, implied by the statement. Here are the responses before you. Many thanks to the writers and writers.
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Raz Goodnick Senior Researcher and Lecturer on Sustainability and Business PARSONS SCHOOL OF DESIGN, NY and Founder of SANDBOX ZERO
When you find out you have a serious illness (God forbid!) You usually need to set an immediate plan of action with specific disease treatment steps (surgery, treatments, etc.), and generally make life-altering changes, and put the treatment at the top of your priorities. We are in a similar situation right now - the climate crisis is present everywhere in the ball, from fires in Siberia and the Amazon - to glaciers melting in Greenland and heat waves in Europe and the US. This situation requires urgent, concrete and courageous treatment on the part of everyone, including on the part of the business sector, which has no small part in this crisis.
The CEO's statement contains no element of those I have mentioned - no urgency, no concrete steps and no courage to acknowledge the seriousness of the situation and the material changes it requires. In fact, the climate crisis is not mentioned nor in a single word in a statement. Therefore, I do not attach too much importance to her and certainly not a revolution. Not even a mini-revolution.
The only thing that is valuable here, in my opinion, is the recognition of the organization that issued the announcement of a change of public sentiment. This sentiment will continue to change rapidly, and eventually the gaps between public demands and significant responses, and the delays and minimalist measures of companies - will bring about a real debate about what responsibilities companies require and will enact legislation that will require them to act , so that we have a chance to curb or slow down significantly the ball.
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Noga Levzion Sheath Greeneye CEO and Fund for Responsible Investment - Value 2
The statement is indeed important, as it includes a statement that shows direction and thinking. But I see two problems with this statement. The first lies in the idea of consolidating all companies under one statement, since among the signed companies there are those who lead responsible conduct, and those that are only at the beginning.
The second problem is related to urgency. Unfortunately, the time for a general statement is long overdue, and while we are currently seeing extreme global warming events, we must commit ourselves, while the statement has no concrete commitment to implementation.
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Liad Ortar To the destination Head of the Corporate Responsibility Institute at the Law and Business Academic Center
The cheeky spirit created around this statement is truly unprecedented and there are even those who have declared it the 'Balfour Declaration' of the business sector. Sadly, I had to pour some cool water on this bonfire and try to make things accurate as I understand and interpret it.
This statement is nothing more than a celebration of condescension and corporate arrogance . In a long and detailed sentence, all CEOs claim that thanks to the corporate entities, we receive health, energy, food, a healthy environment, and more. The very 'corporate god' who brought us down from the sky is from there, Deus Ex prepares - God from the machine. Most importantly, we are in a democratic system of government, the source of power and authority (as well as services and products) is from the state and it derives its authority from us, the residents who granted it to us under the social convention that unites us all as a society and as a state. While corporations have an important role, they are not exclusive. It is to serve the company - and not the other way around!
Secondly, this statement is published at a time of real global crisis, it is the climate crisis. We know today that many global energy corporations, and Americans within them, have known for decades about what is about to happen and have done nothing. Not only did they do nothing, but they made huge profits as a result of trading in all of us in the future. How can the world's largest corporate executives publish such a statement and say nothing about climate change?
While the statement is important and positive in its foundation, it should be said that it is loaded with meaningless superficial statements, corporate arrogance and complete disconnection from what is happening in our world here and now . The petitioners would do well if they pulled her back to the drawing board and found the way to incorporate a little modesty and remorse. Or then the confidence of all of us in the business sector will return and pave the way for true partnership in dealing with the vast corporations that are at our door.
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Dr. Noam Gressell CEO of ECO-OS and Asif Strategies
My approach to the US business leadership statement is very complex and dependent on the dimensions of time - present, past, future.
In the present, the statement should be welcomed, but it must also be acknowledged that business leadership has no choice but to try and take a big and courageous step that will allow it to begin a late and radical change process. The current US business leadership lies between the hammer and the anvil, between populist, anti-environmental governance - and a growing public recognizing the rise of environmental crises; Between dependence on international trade - and nationalist and economic separatism; Between a seven and a consumer economy - and the heavy clouds of hurricanes are growing, braking agriculture, fires in Amazon and Siberia, and a real danger to the same economy that allows international corporations to rule. I understand the current statement more as a call for help, than as a real leadership step.
In the past, there is certainly room for sarcasm that arises from some of the reactions. That statement comes late . 50 years after the understanding of where all this has led has developed; 40 years after their predecessors in office began a systematic concealment of facts; 30 years after an unequivocal scientific consensus was formed; Twenty years after systemic changes came to light and a decade after climate change accelerated and exacerbated geopolitical crises on all corners of the globe, the world's rich began to build spacecraft for Mars and shelters in New Zealand.
One should not shed a tear on corporations and the 'leadership' that has chosen short-term profit at the expense of the earth, especially when its location is the result that has been clear and undeniable for many years. The very presentation of corporate executives as 'leadership' is in my doubt . It is hard to guess whether without the popular movement of the kind of Extinction Rebellion 'courage' that is now being demonstrated in the business sector, it would not have been rejected in a year or a decade, despite all the accumulated data in the field.
Still, most important of all is the future. It's hard to tell what a cipher is. Will the current statement really drive businesses into action? In my opinion, some of them - yes. Will they be able to change at a rate that will allow them to survive? Could they really be part of the solution and not just a historical part of the problem? Will we all be able to change in time given the certainty crises ahead of us?
History shows that most corporations will not be able to make a significant change, and will collapse despite their current strength. They have stepped down from the stage either as a result of the inability to adapt to the new environmental reality, or as a result of angry crowds coming into account with them for their part in intensifying the crisis so far. At the same time, our fate and the fate of our children are largely in their fate (or at least some of them). The future poses tremendous challenges for future generations, and we must therefore welcome every factor that raises sleeves and contributes human, economic and organizational capital for the enormous change we all have to make.
In the present situation, it is best not to come into account with them simply because of the problematic past - it is better to examine them according to their immediate willingness to storm with all of us, locals and migrants, rich and poor, northern and southern. Indeed, their duty of proof. But it is our duty for future generations to harness any human resource that will secure their future - even those who have committed crime and must return to a profound and sincere environmental and social response.
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Elaine Cohen CEO of Beyond Business and writes a csr-reporting blog
I welcome this statement. It is enough for me that the Council of Institutional Investors - a body interested in maximizing the return of investors expresses opposition , to know that the statement is quite significant. The statement basically confirms that for some 200 leading and reputable business companies, maximizing profit is no longer the most important thing.
Obviously, this is a statement and not a work plan. But this statement, signed by all top executives of the American industry, has great weight. For all the millions of employees affected by the statements of their CEOs, as well as for all other stakeholders. In addition, in a growing atmosphere of lawsuits against companies that do not comply with their existing reports, this statement is significant and must have caused legal counsel in all companies no small headaches.
Before each plan of action comes vision, position, intention. Expressing intentions in public and in power that has not been so far is a platform to accelerate the change (and most signatories already have SBT and long-term sustainability goals). So I welcome the statement and hope the stakeholders continue to monitor performance and demand more.
So what do you think?
And what is your opinion on this statement? Does it have the potential to change how large corporations manage their impact on society and the environment? What does it take to make the statement an operational plan?
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Date: August 27, 2019 Author: Ofra Palmer
Thanks. It is interesting to read my colleagues' remarks. To me, the public atmosphere is what compels corporate leaders to have a refreshing message. However, what will lead to the real change in corporate behavior is regulation. As I see the huge corporate behavior today, significant regulation and legislation is the only one that manages to change corporate production and development processes and it also influences other aspects of corporate behavior with its stakeholders. If corporations do not meet the limits set by the legislature, they are fined and lose approval for the operation and sale of a problematic product. So I connect to things of the destination, the public sector to legislate and lead. And, I add, straightforward power to third sector organizations. They play an important role in driving this change, because without the protest, public pressure and discourse that prompted them, corporations would not have made that statement.
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Date: August 27, 2019 Author: shirley
Many thanks for the feedback from Ofra. Agree with you that social protest is a significant motivator and that regulation is the most effective dictator. The problem is that the world's governments are getting weaker. It is no coincidence that this statement was made in a country in which the government appears to be acting contrary to the general public interest (commitment to climate goals, manner of dealing with immigration challenges, etc.). And precisely because you have known this state from the inside recently, it will be interesting to know how you view the relationship between corporations and government there (I can think of a solution, for example, from pro-ecological local regulations, such as California and New York).
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A LITTLE ABOUT ME Specializes in connecting the business world and the social world in the digital age. Corporate Responsibility Process Consultant, Social Impact and Social Marketing. Has been in the field since 2000. Works with major brands and companies in Israel. Design: Studio 0304This website created by Ziv Leshem Back to Top