Redefining the ‘purpose of a corporation’
In August, the Business Roundtable (“BR”), an association of chief executive officers of the leading US companies, made a significant change to their definition of the purpose of a corporation – the fundamental idea of what their businesses should strive to achieve.
The old principle stated that “the social responsibility of business is to increase its profits”, but the organisation has now moved to the pledge that business managers should “lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders”.
This announcement made the news headlines, suggesting this is a significant change in the tone of corporates – the updated statement moves away from shareholder primacy and instead requires commitment to all stakeholders. While news editors have showcased the change taking place as front-page news, those of us who have followed the Business Roundtable know that past statements and principles already pointed at the importance of considering all stakeholders as part of doing business.
We are optimistic about the direction of travel of the corporate world in general, albeit a little impatient… read more about our thoughts on the responsibilities of corporations in emerging markets including a case study, as well as our regular updates on:
- engagement activity in the quarter
- Voting highlights including two case studies
- A focus on India: healthcare, financial inclusion and the economic road ahead
- A roundup of portfolio activity
Download the full note to read more