The Business Roundtable issued a new statement Monday on the purpose of a corporation signed by 181 CEOs pledging to lead their companies for the benefit of all stakeholders.
The statement, the latest in the American CEO association's periodic statements on the principles of corporate governance since 1978, says the purpose of a corporation is to serve customers, employees, suppliers, communities and shareholders.
According to a Business Roundtable news release, every version of the statement since 1997 has said that corporations exist "principally to serve shareholders." The new statement supercedes all previous statements and establishes a modern standard for corporate responsibility.
"The American dream is alive, but fraying," said Jamie Dimon, chairman and CEO of J.P. Morgan Chase & Co. and chairman of Business Roundtable, in the news release. "Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community's unwavering commitment to continue to push for an economy that serves all Americans."
The Council of Institutional Investors disagrees with the Business Roundtable, saying Monday that "accountability to everyone means accountability to no one" in its own statement.
Saying the roundtable's statement undercuts the notion of managerial accountability to shareholders and "seems to downplay or ignore the role of markets."
"While we appreciate that CEOs do not like to feel constrained and subject to market forces, nothing in the BRT statement will change this real-world dynamic of public equity markets," the CII said in the statement.