Illustration: Lazaro Gamio/Axios
The Business Roundtable today made a small, symbolic but significant move: 181 of the nation’s top CEOs agreed that driving shareholder value is no longer their sole business objective.
Why this matters: They expanded their mission beyond mere wealth creation to include everything from taking care of employees to helping their communities.
- This shift, spearheaded by BRT Chairman and JPMorgan Chase CEO Jamie Dimon, reflects the growing pressure from employees, social media and customers to do more than increase stock prices.
The big picture ... Truth is, even the most press-shy, introverted CEOs need to be de facto politicians, thanks to several unambiguous social trends:
- Millennial employees demand their employers stand for something beyond profit.
- It is getting harder to recruit and retain talent, especially tech talent, if profit is the only objective.
- A rising number of consumers make purchasing decisions based on a company's social purpose.
- The media applies a lot more pressure on CEOs to take positions on political topics, such as race and immigration.
- Every CEO/company is vulnerable to split-second, social media uprisings. Undefined CEOs and companies find it impossible to push back.
Watch for: Mischievous shareholders could use this BRT document, which was first reported by Fortune's Alan Murray, to accuse CEOs of worrying about things beyond increasing the value of their shares, a fiduciary responsibility.
- I hear several general counsels cringed — and protested — when they saw this document.
Interesting historical note: A half decade ago, Steven Pearlstein, who won a Pulitzer for his WashPost columns on the economy, partly blamed the BRT’s focus on shareholder value alone for the corruption of capitalism.
Tuck away … The BRT members that didn't sign the new document: Alcoa, Blackstone, GE, Kaiser Permanente, NextEra, Parker Hannifin and State Farm.
Read the BRT's full text and see the CEOs that signed on: