The Changing Role of Business

On August 19, 2019, 181 CEOs who are members of the U.S. Business Roundtable (BRT) issued a statement on the purpose of a corporation. Its opening sentence speaks to each person’s right to lead a life of meaning and dignity. It goes on to acknowledge the central importance of stakeholders, including customers, employees, suppliers, local communities and the natural environment, all of which are mentioned before any reference is made to shareholders.

Compare this statement to the one issued by the BRT in 1997 in which the paramount duty of management was to the corporation’s shareholders, while the interests of all other stakeholders were seen as only derivative of this duty. Such single-minded purpose echoed an even earlier New York Times editorial, written by Nobel-prize winning economist Milton Friedman in 1970, stating that the only social responsibility of business was to make a profit.

By Chris Laszlo and Robert Widing

Source: Global Responsibility

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