Business is changing; responsible investors are part of the reason
Last month the Business Roundtable, which represents some of the largest companies in the United States, released a new statement of corporate purpose.
The old one, which came out in 1997 and put shareholders above all other corporate stakeholders, was the product of a new outmoded way of thinking about the world, a notion that says companies have no responsibility to society other than making money for its owners.
The new statement says that maximizing shareholder profits can no longer be the primary goal of corporations. It focuses instead on investing in employees, dealing ethically with suppliers, fostering diversity and inclusion, protecting the environment, and supporting the communities in which companies operate.
This is a big change. Words matter, and the fact that the CEOs of some of the country’s largest companies are now using language that requires them to be accountable to the public shows that the tide is turning in the struggle for a more conscientious capitalism. Some of that change is generational; more than 80% of millennials say they won’t work for a corporation that’s ruthlessly greedy.
Regardless, what we’re seeing in this statement is finally an acknowledgement of corporate excess a decade after the global Financial Crisis. Better late than never, I say.
Of course, we know that the purpose of Islamic finance is to promote social justice, which seems to be an implied goal of the new Business Roundtable. The more folks we have on board who share our objectives the greater chance we all have to do good.
There are some who will see the statement as cynical lip service being paid to the politically correct ideas of inclusion and fairness with no real commitment to action. But that’s where investors have a role to play. By taking the Business Roundtable’s statement and using it as leverage to hold companies accountable to these principles, we can help advance the move toward a business environment that respects the common good.