August 19 marked five years since Business Roundtable issued an updated Statement on the Purpose of a Corporation, declaring that companies should deliver long-term value to all their stakeholders, not just shareholders.
The 2019 statement was signed by 181 CEOs from some of the biggest corporations in the world and was considered a mandate for purpose and a recognition that purpose and profit could operate hand in hand and were not mutually exclusive.
The supposition was that good business could actually lead to more profitable businesses, if the purposeful actions were authentic to the missions of these enterprises.
It included commitments to job creation partnerships with small businesses throughout America, access to education and training, upskilling, and prioritizing U.S. manufacturers in supply chain decisions. It also promoted diversity, equity and inclusion across businesses; racial equity and justice; mental health initiatives; and a focus on students attending Historically Black Colleges and Universities.
This statement by the trade body for company CEOs, chaired at the time by JPMorgan Chase CEO Jamie Dimon, was not borne out of COVID or some other crisis. It happened in 2019 and was both a throwback to the consensual and stakeholder capitalism of the 1970s and a culmination of the evolution of business since Business Roundtable last tackled this topic in 1997.
Then, it said the “paramount duty” of a corporation is to its stockholders and that the interests of employees and other stakeholders were only relevant as a “derivative of the duty to stockholders.”
Now, customers, employees, suppliers and communities where businesses were based would again be on an equal footing with each other.
In October 2020, five months after the murder of George Floyd by a police officer in Minneapolis and now with Walmart CEO Doug McMillon chairing the organization, Business Roundtable outlined strategies to advance economic opportunity for Black and Latino communities and take steps to close the racial wealth gap.
A report unveiled alongside the strategies noted that racial wealth gaps and a lack of economic mobility persist in communities of color. Roundtable members including BCG, Boeing, Cisco, Citi, CVS Health, Gap, IBM, PwC, State Farm, Target, United Airlines and Wells Fargo made additional individual commitments and launched programs aimed at expanding broader economic opportunity to diverse communities.
A couple of weeks ago, and now chaired by Cisco CEO Chuck Robbins, Business Roundtable concluded its five-year audit by noting that, when its renewed statement was announced in 2019, Fortune ran a headline, “Profits and Purpose: Can Big Business Have It Both Ways?”
Business Roundtable, under the leadership of CEO Joshua Bolten, reaffirmed: “The answer is yes — companies can and must.”
“All well in the State of Denmark” you might think?
Well, not really.
Concurrent to the reaffirmation of purpose and profit being tightly aligned, it seems all hell has broken loose in the debates around purposeful business and companies’ licenses to promote diversity initiatives.
Just yesterday, iconic auto manufacturer Ford became the latest — and most high-profile — enterprise to reassess diversity. In an internal memo, the Detroit-based automaker said it had taken a “fresh look” at its DE&I policies over the past year and will not now use quotas for minority dealerships or suppliers and that it doesn’t have hiring quotas. It also said it will stop taking part in the Human Rights Campaign’s Corporate Equality Index.
That seems a little disingenuous, especially when you peruse the proclamatory statements CEOs made back in 2019 when the Business Roundtable revised its member principles.
Ford CEO Jim Hackett and chairman Bill Ford told employees in June 2020 after George Floyd’s killing: “There are no easy answers. We are not interested in superficial actions. This is our moment to lead from the front and fully commit to creating the fair, just and inclusive culture that our employees deserve.”
Ford follows Lowe’s, Harley-Davidson, John Deere and Tractor supply in similarly rolling back its stated commitments to DE&I. Conservative activist Robby Starbuck is taking the credit for most of these retrenchments with gleeful posts on X about “this just being the start” of the anti-woke backlash.
Tractor Supply CEO Hal Lawton sits on the board of directors of Business Roundtable, so some would say he is not matching his actions as CEO of the farm supplies and agricultural equipment company with the stated aims of the CEO trade association he helps oversee. Lowe’s is noteworthy in that its leader, Marvin Ellison, is one of the few Black CEOs in the Fortune 100 list. Ford CEO Farley is on the board of Harley-Davidson.
Elsewhere, UPS this week said goodbye to chief corporate affairs and sustainability officer Laura Lane. Lane’s duties will be subsumed within the existing team as the shipping courier streamlines roles and responsibilities “to create efficiencies across the company.”
Unilever, one of the pioneers in purposeful comms and marketing, will continue to stand strong with groundbreaking brands such as Dove, but not necessarily all the brands in its portfolio. Chobani is also sticking with its purposeful mission.
It’s a complicated web that has been woven and these are super-complicated and nuanced situations to navigate for CEOs and their heads of corporate affairs and communications.
The specter of the Supreme Court’s decision to overturn affirmative action in colleges being extended to business and pension funds in places such as Texas refusing to engage with financial firms that don’t back the oil and gas industry are two other headaches CEOs could do without in these complex global economic and geopolitical times.
In some quarters it is being suggested comms departments are being blamed for leading companies too far down the road of purpose, ESG and DE&I. That may go down as shooting the messenger but it speaks to the new responsibilities and holding to account that comes with being at the top table. A strong, self-confident comms leader also needs to have the gumption to speak truth to power and push back on their opinions at times.
Times change and CEOs are furiously trying to disassociate themselves with politics and anything that can be labeled political. They’d ideally like to exist beneath the surface and generally not get involved, especially in the febrile run-up to November’s election and a possible second Trump administration to negotiate.
In-house PR leaders asked for that seat at the C-suite table. Now it’s time to step up and help their CEOs weave their way through one of the most complicated business, reputation and comms challenges of our time.
