Letter From the Chairman: Corporate Virtue
By Robert H. Rock

In December Directors & Boards held its second annual “Character of the Corporation” forum. Our first forum had examined how boards of directors can balance corporate profits with social purpose by embracing ESG initiatives and programs. This year’s forum explored how they can take on the larger responsibilities to their varied stakeholder communities, particularly in the wake of the global pandemic, social-justice unrest, and economic downturn. We again convened an outstanding group of governance thought leaders to discuss the importance and impact of corporate character.

Character embodies the core values and convictions that are etched into a company’s DNA, inspiring its societal commitments, environmental responsibilities and moral consciousness. The character of the corporation animates behavior, conveying its core values and expressing its corporate culture to a broad array of stakeholders.

When establishing our nation, America’s founders turned to the classical teachings of ancient Greek and Roman philosophers who underscored the critical importance of “virtue” as a core value for individuals, societies and governments. For the classical philosophers, virtue was the essential element of public life, placing public good before private interest. For the Revolutionary generation, virtue was the very essence of character, putting aside personal advantage for the collective benefit of all. Presidents Washington, Adams, Jefferson and Madison tried to cultivate virtue in themselves and instill it in the fledgling nation.

Today, the word “virtue” has taken on a less political and more personal definition depicting qualities of integrity, honesty and uprightness, which, in aggregate, constitute high moral character. These qualities are often incorporated into written statements delineating a company’s guiding principles, code of conduct, and core values.

But should “virtue” as defined by the classical philosophers be a core corporate value? By embracing stakeholder capitalism and by undertaking ESG initiatives, CEOs can demonstrate, or at least signal, this classical virtue of doing good both within and outside the company. When acknowledging this virtue, CEOs often assert that bottom-line performance will be enhanced, perhaps not in the short-term, but sometime down the road. Their assertion is often summed up in the catchphrase “doing well by doing good.”

Outspoken critics of short-termism and shareholder focus such as BlackRock’s CEO Larry Fink are advocating for more public good through better corporate governance. They posit that the responsibility to solve pressing and persistent social and environmental problems, notably income inequality, social injustice, and climate change, falls to business leaders, particularly in the absence of political leadership. Pivoting away from shareholder primacy, CEOs are increasingly taking on this responsibility, a commitment well beyond mere “virtue signaling.”

We at Directors & Boards recognize the intensifying drumbeat for boards to go beyond profits and develop a sense of purpose that focuses on social good, and we will continue to explore how far directors can go in serving a broad array of stakeholders. Directors have a key role in addressing our nation’s fundamental problems. By instilling classical virtue as a core corporate value, they can help effect fair, equitable and sustainable performance.


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