Sense of Purpose
By Robert H. Rock

On November 20 and 21 Directors & Boards is convening a select group of top public company board members, institutional shareholders, proxy advisors, judicial and governmental representatives and corporate governance thought leaders to discuss the changing character of the modern corporation.


Where corporate America has been, and where it needs to go.
By Robert Rock

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The group’s 1981 statement called for corporations to be “a positive force in society.” What’s different this time?
By Kristin Bresnahan

Three Problems With the Stakeholder Theory
Business Roundtable’s misguided decision to put shareholders last. An unpleasant déjà vu.
By Charles Elson

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Former Vanguard CEO Weighs in on ‘Purpose’ & ESG

Bill McNabb says a focus on the greater good leads to long-term value
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Western Union’s First ESG Report
CEO Hikmet Ersek rides the “purpose” train, supported by the board.
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The forum, to be held at The Metropolitan Club in New York City, will explore the “The Character of the Corporation,” the core values and convictions that are etched into a company’s DNA. Character can animate a company’s social commitments, environmental responsibilities and moral consciousness. We will focus on whether corporations can and should attempt to balance corporate profit and social purpose by embracing environmental, social and governance principles (ESG).

For half a century, corporate America has placed its priority on providing profitability for its shareholders, which has proven to be successful in generating jobs, spurring innovation, and enhancing our country’s overall wealth. The interests of customers, suppliers, employees and communities have always been taken into consideration since to survive and prosper a company has always needed to offer good value to its customers, adequately compensate its employees, deal fairly with suppliers, and maintain good relations with the communities where it operates.

Yet the recent “purpose” proclamation from The Business Roundtable (BRT) may represent a significant shift in corporate chieftains’ attitude toward their responsibility to society on many hot-button topics like economic inequality and climate change. Their attitudinal shift may be in response to the growing tide of mistrust and outrage toward capitalism, particularly among the liberal left whose leaders, such as Senator Elizabeth Warren, have proposed that big companies should be chartered by the federal government to look after all stakeholders.

Balancing profit and purpose is tricky. CEOs are asserting that their ESG initiatives will enhance bottom-line performance. Their assertion is often summed up in the catch-phrase “doing well by doing good;” though there is scant empirical evidence of any correlation. Although addressing issues such as gender equality, pay equity, climate change, carbon neutrality, diversity and inclusion, gun control, opioid addiction, employee wellness, privacy, LGBT rights, affordable housing, etc. may ultimately enhance longer-term profits and improve longer-term competitive positions, the present value to current shareholders is uncertain and difficult to measure. Yet for BRT CEOs whose annual median compensation is $15 million, the intrinsic value of pursuing ESG objectives may enhance their personal feeling of doing good, which some may deride as “virtue signaling.”

In our upcoming D&B forum we will address the intensifying drumbeat for boards of directors to consider more than just profits and develop a sense of purpose that focuses on social good both within and outside the company. Some key speakers include: Indra Nooyi, an Amazon director and former PepsiCo CEO; SEC Commissioner Robert Jackson, Jr.; and Delaware Supreme Court Chief Justice Leo Strine, just to name a few. We will set out to define social purpose and consider how far directors should and can go in serving a broad array of stakeholders.


2019 Third Quarter

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