When the US Business Roundtable recast its statement on the “purpose of a corporation” in August, the Financial Times cautiously endorsed the shift from shareholder primacy to a broader commitment to all stakeholders. We also urged businesses to practise what they preached. Our series on companies that are forging purpose-led strategies that will sustain them into the future shows how difficult that can be.
Many signatories to the BRT statement still seem to believe it was merely catching up with progress they had already made at their own companies. They are in for a rude shock. There are clear reasons why further action is necessary. They include the rising tide of protest about failure to tackle climate change, the commitment of younger workers and customers to purpose-led businesses (and their disquiet about companies that fall short), and tensions over the fact that wages continue to lag overall economic growth.
As Paul Polman, former chief executive of Unilever, put it at a recent forum on progress towards the UN’s sustainable development goals, the cost of inaction is rapidly becoming significantly higher than the cost of action.