181 CEOs Redefine 'Purpose Of Corporation', Say Employees, Customers More Important Than Shareholders

“Maximizing shareholder value” and “maximizing profits,” the false gods in whose name American business firms have callously fired countless numbers of employees over the decades, will no longer be worshipped by some of America’s largest corporations.

On Monday, 181 corporate members of the Business Roundtable (BRT) issued a new “Statement on the Purpose of a Corporation,” which gives more importance to fair pay and the professional growth of employees.

The statement redefines the idea of a corporation’s purpose and also seems to eliminate the notion corporations exist, first and foremost, to serve shareholders and maximize profits. Replacing these discredited goals are four “modernized principles”: delivering value to customers, investing in employees, dealing ethically with suppliers and supporting communities in which firms operate.

BRT said this new definition “supersedes” past statements and outlines a “modern standard for corporate responsibility.” It said these four values are “at the forefront of American business goals.” It emphasized each of the four new principles is essential.

“We commit to deliver value to all of them, for the future success of our companies, our communities and our country,” said BRT.

The statement said the new definition of investing in our employees “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.”

As for generating long-term value for shareholders, BRT said it’s “committed to transparency and effective engagement with shareholders.”

“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,”according to the statement. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

“The American dream is alive, but fraying,” pointed out Jamie Dimon, chairman and CEO of J.P. Morgan Chase and BRT chairman.

“Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans,” said Dimon.

Along with Dimon, the statement received signatures from CEOs such as Amazon’s Jeff Bezos, Apple’s Tim Cook, Bank of America’s Brian Moynihan, Dennis Muilenburg of Boeing and GM’s Mary Barra.

“This new statement better reflects the way corporations can and should operate today,” said Alex Gorsky, chairman and CEO of Johnson & Johnson and chair of the Business Roundtable Corporate Governance Committee.

Darren Walker, president of the Ford Foundation, called the statement “tremendous news because it is more critical than ever that businesses in the 21st century are focused on generating long-term value for all stakeholders and addressing the challenges we face, which will result in shared prosperity and sustainability for both business and society.”

One of the CEO signatories, Larry Fink, previously called on CEOs to reevaluate the purpose of a corporation, specifically the “inextricable link” between purpose and profit.

“Purpose is not the sole pursuit of profits but the animating force for achieving them,” wrote Fink in his 2019 annual letter to shareholders. “As divisions continue to deepen, companies must demonstrate their commitment to the countries, regions, and communities where they operate, particularly on issues central to the world’s future prosperity.”

Founded in 1972, BRT is an association of chief executive officers (CEOs) of major U.S. corporations that advances and promotes pro-business public policy. It supported Barack Obama’s presidency.