Here is an extra newsletter for this week due to the article in the url below, which is a follow-up to last Fall's Business Roundtable statement on stakeholder democracy (see Strategic CSR – Business Roundtable and Strategic CSR – Business Roundtable (II)). The purpose here is to check-in with how some of the statement's signatories are doing in light of the COVID-19 pandemic. In short, not good:
"Last August, the chief executives of 181 of America's largest corporations signed a document pledging their commitment to run their companies for the benefit of workers and communities, and not just for shareholders. … Today, with the planet under assault from a pandemic that has delivered the most profound economic pain since the Great Depression, key signatories are furloughing employees, paying dividends to shareholders and provoking complaints from workers that they aren't adequately protected from danger."
Some would argue this is not the best time to measure any shifts in the priorities of the firms that signed-up to the statement. Others would no doubt note that the responses of firms has varied (the article features Marriott prominently), with some signatories taking a broader stakeholder perspective. The article, however, is firm in its conclusions:
"Their actions expose the reality that the rhetoric of the Business Roundtable did not alter the decisive question of American capitalism — where the money goes. In the run-up to the crisis, many companies used cash to buy back their shares and pay out dividends, rewarding shareholders, while leaving themselves with fewer resources to aid workers when disaster struck."
Interestingly, the article calls out the main barrier to substantive change:
"So long as executive pay remained tied to stock prices, shareholder interest would remain supreme."
Have a good weekend.
David
David Chandler
© Sage Publications, 2020
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A Vow by Big Business Proves Too Hard to Keep
A Vow by Big Business Proves Too Hard to Keep
By Peter S. Goodman
April 14, 2020
The New York Times
Late Edition – Final
B1, B4
