Stakeholder Capitalism Will Fail If It’s Just Talk
Companies will have to prove they’re committed to goals beyond maximizing shareholder value.
Give some credit where it’s due.
Photographer: Alex Wroblewski/Getty Images North AmericaFor 47 years, the Business Roundtable has lobbied on behalf of corporate America. Much of that time, it maintained a fiction1 -- that the sole purpose of a corporation was to maximize profits on behalf of shareholders. This philosophy has been under assault for several years now, and this week the Business Roundtable announced it wants to put it to rest.
In a widely circulated memo, the 200-member organization reversed itself, writing that "shareholder primacy” is no longer the sole purpose of a corporation. Instead, corporations must include a commitment to “all stakeholders,” which includes customers, employees, suppliers and local communities.