Corporate America is responsible for providing economic benefits to all, not just its investors, the Business Roundtable group said on Monday.
The group’s “statement of corporate purpose” was signed by the heads of more than 180 U.S. companies, including the CEOs of Amazon.com Inc <AMZN.O>, American Airlines <AAL.O>, the largest airline in the world; and JPMorgan Chase & Co <JPM.N>, the biggest American bank.
Although largely symbolic, the group’s statement goes against a roughly 30-year viewpoint that corporations exist to serve shareholders.
That notion has guided every major business decision, from how much a CEO is paid to whether a company invests in its employees or fires them.
The statement comes amid calls for greater corporate responsibility from Democratic candidates for president and employee activists who want companies to take stances on issues outside of the corporate sphere.
The chairman of the Business Roundtable, JPMorgan CEO Jamie Dimon, said there is a growing wealth gap in the United States, and prioritizing all stakeholders will lead to a healthier economy.
“The American dream is alive, but fraying,” Dimon said in a statement. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term.”
The statement outlined five commitments, including to invest in employees by providing fair wages and “important benefits,” support communities and “protect the environment.”
The group’s statement could be significant because the previous tenet – shareholder primacy – fueled a range of decisions now commonplace at publicly traded companies, said Barbara Dyer, an MIT Sloan School of Management professor.
“If you think that the primary thing is to generate shareholder value then you want to cut down any costs that are unduly high,” Dyer said.
In the 1980s, that led to staff cuts and efforts to break unions.
Dyer said the Business Roundtable may have changed its perspective now because the tight labor market presents an opportunity to rethink “how we view and how we invest in people.”
She added, however, that it is unclear whether the statement represents a real turning point and said she was skeptical it will create major changes, for example, in how executive compensation is structured. “I don’t have any illusions that that’s going to change any time soon.”
Maura Cowley, a director with the Sierra Club Resist campaign, said the statement lacks substance because some of the companies that signed it are “actively making the climate crisis worse.”
“It’s hard to take this letter seriously without further details or next steps,” Cowley wrote in an emailed statement. “Until these sentiments are met with substantial action by these companies it is hard to see this as anything other than words on paper.”
One investor group, the Council of Institutional Investors, criticized the group’s statement, saying that “accountability to everyone means accountability to no one.” Investors are a positive force pushing companies to focus on long-term performance, it said.
“It is government, not companies, that should shoulder the responsibility of defining and addressing societal objectives with limited or no connection to long-term shareholder value,” the Council said.
The AFL-CIO labor group did not immediately reply to a request for comment on the Business Roundtable’s statement.
(Reporting By Elizabeth Dilts; editing by Jonathan Oatis and Dan Grebler)