More than twenty years ago our founder articulated a vision for what a corporation should be that was a departure from then-traditional business wisdom holding that a company’s only duty was to maximize shareholder value. He proposed that, while that is a company’s first duty, focusing on that alone is not the only thing shareholders really want. A company is a corporate entity of people, including shareholders, management, employees, customers as well as the community and culture that nurture them. All these groups have an interest in the company’s success and the company that finds the best balance to serve all of them all will have the most success in the long term.
Decades later we see more and more investors expressing interest in companies that create products and services consistent with their personal values such as sustainability and responsibility. This is termed ESG investing (Environment, Social, Governance) and is now mainstream. Last year a group of the nation’s top CEOs redefined the role of corporations in American society, moving away from the notion that large companies should focus primarily on maximizing profits for shareholders. In a revised “Statement on the Purpose of a Corporation” signed by 181 CEOs, Business Roundtable, which represents the heads of the nation’s top companies, said corporations should be focused on “all stakeholders” when making decisions. It is gratifying to see that his vision is gaining traction.