In August 2019, the Business Roundtable announced the release of a new Statement on the Purpose of a Corporation. It was signed by 181 CEOs who commit to leading their companies to benefit all stakeholders – customers, employees, suppliers, communities, the environment, and shareholders. This Statement was a break from the past statement stating that a corporation’s sole purpose was the creation of profit for its shareholders.
The significance of the new statement from the Business Roundtable can’t be underestimated. It abandoned the corporate philosophy that profitability was the only thing that mattered.
The shift to a multi-stakeholder framework was a response to a growing awareness that profit could NO LONGER be the only thing that mattered.
Noticing Shifts in Corporate Mindsets
In the early 2000s, I was invited to be an observer and theme weaver for a series of CEO gatherings. The gatherings were designed to reflect on how these Minnesota leaders were shaping the culture of the community.
It was fascinating to notice how their location – their “place” – had impacted how they led their corporations. This business community helped shape a community culture of volunteerism and giving. They had also placed importance on a longer-term view of maintaining vital communities throughout our state. Clearly, these CEOs, many of whom had been born and raised in Minnesota, still cared deeply for the place and its future.
When we got to their concerns, one primary theme was a growing pattern where CEOs were being transferred into corporate offices, staying for just 3-5 years, and then were replaced by yet another new CEO transferred in from a different place. None of the newer CEOs had the same love of place. It shaped how they made decisions, typically based solely on profitability rather than trying to create synergy between corporate and community values.
The trend these CEOs noticed 20 years ago has amplified and spread across the states. This disconnection between the corporations and the community they were based in has reinforced short-term profits and placed a sole focus on serving stakeholders. One of the effects of this disconnection of corporation and place was that if a factory closed, there wasn’t a concern for how it impacted the community unless it created a public relations issue.
Defining stakeholders with a regenerative mindset
As I mentioned when this blog series began, our decision-making criteria must shift when we hold a regenerative mindset. So, too, does our definition of stakeholders. The Business Roundtable expanded stakeholders to customers, employees, suppliers, communities, and shareholders. I would like to suggest that there might be a few more.
The Iroquois constitution states that a leader must carry the unborn voices of children seven generations in the future and fight for the quality of their lives based on the decisions we make today. The Business Roundtable list of stakeholders states that the environment is considered a part of communities. Yet, given the intensity of climate change shifts, we may need to strengthen our thinking, adding the planet and future generations as stakeholders as well. In that spirit, let’s ask ourselves some questions:
What if we added our grand and great-grandchildren to our stakeholder list and brought their perspectives and needs to our stakeholder list?
What would happen to our organizations’ culture if the planet’s health and future generations’ ability to thrive on this planet had equal weight to the needs or desires of shareholders and other stakeholders?
How might our world change now and in the future if we brought more of a regenerative mindset to who counts when making decisions and setting strategies for our organizations?
