In "The Corporate Purpose Debate: Shareholder Value and Corporate Responsibility in an Era of COVID-19 and Social Unrest," Sidley Austin's Holly Gregory explains the logic behind the BRT's realignment of its statement of corporate purpose last year with its 1981 statement, and how corporations inherently serve both shareholder and stakeholder interests in their creation of goods and services that fulfill societal needs (including food, shelter, health care, and employment) and generate profits.
Referencing one former CEO's articulation of the stockholder vs. societal interests "debate": "That debate reflects a false dichotomy by suggesting that corporations must choose between the two, as Ralph S. Larsen, when CEO of Johnson & Johnson, emphasized in terming this the "tyranny of the 'or'." When asked whether he serves shareholder interests or societal interests, he answered with a simple 'yes'," Gregory observes: "CEOs understand that a company doesn’t succeed and deliver strong shareholder returns for long if it doesn’t provide goods and services of value to society while satisfying the fair expectations of a broad range of key stakeholders."
The article further suggests initiatives companies may consider to promote the BRT's corporate actions and public policy recommendations to advance racial equity and social justice expressed in its October 15, 2020 release (reported on here: "Business Roundtable") in furtherance of stakeholder and stockholder interests.
See our recent reports: "Director Fiduciary Duties: Stockholders & Stakeholders" and "BRT Statement of Corporate Purpose: Debate Continues." This post first appeared in the weekly Society Alert!