This is causing somewhat of a stir but it’s mostly meaningless guff:
Nearly 200 chief executives, including the leaders of Apple, Pepsi and Walmart, tried on Monday to redefine the role of business in society — and how companies are perceived by an increasingly skeptical public.
Breaking with decades of long-held corporate orthodoxy, the Business Roundtable issued a statement on “the purpose of a corporation,” arguing that companies should no longer advance only the interests of shareholders. Instead, the group said, they must also invest in their employees, protect the environment and deal fairly and ethically with their suppliers.
This is nothing new. The idea that there is any major western corporation which thinks shareholder value is not maximised by showing a degree of consideration towards employees, the environment, and suppliers is laughable. From the statement above, one would think modern corporations are operating like a mining company in 1890s West Virginia, paying workers in scrip exchangeable only at the company store and if one gets killed they send the widow a ham.
They might have a point about the treatment of suppliers, but I suspect it’s not the one they’re making. When people think of the poor treatment of suppliers by large corporations they conjure up images of grubby children in Bangladeshi sweatshops, sleep-deprived Chinese launching themselves from windows, and Africans hacking at a piece of concrete-like soil with a hoe designed in Roman times. Executives will fall over themselves to stamp this out because to the degree it happens and is under their control it’s an easy promise to make. Similarly, I would be quick to make a promise not to double-park my Ferraris. What they’ll be less keen on rectifying is the utterly unethical practice of allowing suppliers to go bankrupt because they’ve simply not bothered paying invoices that are months overdue.
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” the group, a lobbying organization that represents many of America’s largest companies, said in a statement. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”
Again, this is nothing new. The realisation that companies operate best in a stable, functioning society took place at least a hundred years ago, which is why a lot of early industrialists engaged in philanthropy.
The shift comes at a moment of increasing distress in corporate America, as big companies face mounting global discontent over income inequality, harmful products and poor working conditions.
I’d believe this if the source of discontent were impoverished labourers with callouses on their hands instead of pudgy middle class westerners who wouldn’t know a rake from a wheelbarrow. To the extent a shift has occurred, it is that much of the left no longer see corporations as a problem but as a power to be harnessed in order to bring about their desired political goals, bypassing the political process that has thwarted their ambitions for so long.
What these CEOs are doing is signalling to the American left that they are open to doing their bidding provided they get left alone financially: we’ll sign up to Pride Month and let our HR department fire anyone who posts wrongthink on social media, just don’t look too closely at our lobbying efforts regarding NAFTA and our tax exemptions. As I’ve said before, we might even have reached the point where the senior executives of major corporations actually believe their job is to act as moral guardians of the nation, rather than just pay lip service to the latest woke fad in order to placate the SJW hordes and hoodwink the dim. In that case, what we might be seeing is an attempt to justify progressive CEOs virtue-signalling at the expense of the shareholders. For example:
The CEO of Gillette said he does not regret his company’s controversial marketing campaign inspired by the #MeToo movement, despite losing some loyal customers over it.
Gary Coombe called the loss of revenue from those customers a “price worth paying” in a Monday interview with Marketing Week. Procter & Gamble, the parent company of Gillette, announced Tuesday they had taken over $5 billion in losses for the quarter, after Gillette had an $8 billion noncash writedown after its market share for razors fell over the last three years.
In other words it’s a principal-agent problem, which is nothing new either.