Can a corporation behave ethically?

The Business Roundtable is an “association of chief executive officers of America’s leading companies” who claim to be “working to promote a thriving U.S. economy and expanded opportunity for all Americans through sound public policy.” In other words, it is a lobby group for billionaires.

On August 19, 2019, the Business Roundtable issued a “Statement on the Purpose of a Corporation” complete with a shiny new web site to promote the statement.

The new statement claims they will invest more in their employees, deal fairly and ethically with their suppliers, support their communities, and even protect the environment. Of course the “statement” contains no plan of action and each individual company reserved the right to serve “its own corporate purpose.”

They’ve done this before

It is important to note that in 1977 this same Business Roundtable issued a “Statement on Corporate Governance” which said, “the paramount duty of management and of boards of directors is to the corporation’s stockholders.” The following chart shows what happened as a result of THAT self-serving belief statement. (CEOs are usually major stockholders themselves).

So, after 42 years of putting personal profit above every other consideration, are the corporate CEOs of the Business Roundtable finally waking up to their responsibilities to their employees, suppliers, and communities? Shouldn’t American corporations have been fair, open, honest, and ethical already?

Why are they publishing this now?

Would the Business Roundtable have even taken this first step without Elizabeth Warren and Bernie Sanders pointing out the inequalities in America, asking tough questions, and calling for solutions? In fact, Warren already has a plan for stronger corporate accountability with her Accountable Capitalism Act.

Perhaps the CEOs of the Business Roundtable can see that the political winds are changing and they need to stop plundering the country quite so blatantly. Perhaps some of them even recognize that their current course of political manipulation, cheating suppliers, and abusing employees is ultimately unsustainable. In 1914, industrialist Henry Ford doubled his employees wages when he realized that his workers couldn’t afford to buy the cars they themselves made.

Who are the signatories?

It is interesting to look through the online list of signatories to this new “statement.” The companies are listed alphabetically so it is easy to search. Apple, Dell, IBM, and Oracle are there, but not Microsoft. American and United are there, but not Delta. Home Depot was a signatory, but not Lowes. Rivals Coca-Cola and Pepsico were on the list along with both Ford and GM.

Of course, whether or not a company’s CEO is a member of this group has no bearing on whether or not that company is a good corporate citizen. What will be interesting to watch is whether those who DID sign this statement will actually make any real changes in their corporate practices and in their political lobbying efforts.

Can ethics and big corporations really mix? Or is “ethical CEO” an oxymoron?

Sources: “Statement on the Purpose of a Corporation,” Business Roundtable, August 19, 2019.
“Statement on Corporate Governance,” Business Roundtable, September, 1977, page 3.
David Lazerus, “CEOs say they care about customers and workers. Propaganda experts are unimpressed,” Los Angeles Times, August 21, 2019.
David Gelles and David Yaffe-Bellany ,”Shareholder Value Is No Longer Everything, Top C.E.O.s Say,” The New York Times, August 19, 2019.
David Goldman, “America’s CEOs just made a significant, if mainly symbolic, change,” CNN Business, August 19, 2019.
Tory Newmyer, “The Finance 202: Corporate critics cautiously optimistic about new CEO mission statement,” The Washington Post, August 20, 2019.
Tory Newmyer, “The Finance 202: Elizabeth Warren takes on corporate giants as she lays 2020 marker.” The Washington Post, August 16, 2018.