The role of Business in our society
The sustainable investing world has been on fire this week, after the Business Roundtable made a groundbreaking statement on the Purpose of the Corporation in modern society. For the first time, corporate leaders at the highest level are changing how they think, replacing the mantra of “maximize profits at all costs” (you’ll see the words ‘shareholder supremacy’ thrown around a lot) with ideals that acknowledge the impact businesses have on more of their stakeholders: customers, employees, suppliers, the communities they work in, and their shareholders.
Lots of ink has already been spilled on this topic, from this great piece in the NY Times Dealbook , to this piece in the Washington Post that actually spoke with Responsible Investors to get their thoughts. We’ll save the long responses and analysis for journalists, but we wanted to share our thoughts as well.
We view this move as a step in the right direction. Short term thinking has for too long ruled corporate boardrooms, and we view the shift from next quarter’s results to something longer term and more inclusive as an extremely positive development. Over the past few years, we’ve seen a stunning number of examples where companies were not playing nice in our sandbox, which The Atlantic did an excellent job of summing up:
…They can (like Facebook) break promises to respect their customers’ privacy. They can (like Twitter and Google) generate ad revenue by facilitating the transmission of hate speech. They can (as Exxon used to do) propagandize against climate science. They can (like Jimmy John’s) use illegal contract terms to deter their low-skill workers from quitting low-paying jobs. They can (like the tobacco companies and now the tech companies) push addictive products onto children, or (like Purdue Pharma) create a generation of drug addicts.
We believe in using the power of our investments to create change in these policies, and have worked on these very issues in the past (see our Impact Report for details). We believe we have a responsibility to use the power of our money and investments to hold corporations accountable, to make them play nicely in our sandbox, and understand that they too are citizens of this world.
We need to keep working on these companies to do more than just talk. We need to increase Transparency and Reporting. As investors, we need Data and action. The founders of B Lab (the organization that gave us our B Corp Certification) wrote an excellent piece on this, and we highly recommend giving it a read.
As a firm, we will keep working on these issues. News like this, and this and this, give us hope and keep us motivated to keep doing what we do. And, if you have an issue you’d like us to explore working on, please get in touch!
