Business Roundtable’s Statement on Purpose: The Bar is Still Open, but the Party’s Winding Down
Much has been written about the Business Roundtable’s reversal on the purpose of business — announced August 19, 2019 — and at EPOCH Pi, we believe that date will be seen by historians as a turning point in our economic history. Not an abrupt turning point, but the beginning of a broad, sweeping turn that will take a generation or more. It is a signpost that marks the early days of the purpose economy where people and businesses pursue a higher purpose and where capital is vital but no longer regal.
The recent statement from the Business Roundtable — a group of CEOs from some of America’s largest companies — outlines their definition of a modern standard for corporate responsibility.
“The American dream is alive, but fraying,” said Jamie Dimon of JPMorgan Chase & Co. and Chairman of the Business Roundtable. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
The Times They Are A-Changin’
For thousands of years, wealth has enabled power and power has protected wealth. The few who have power and wealth guard it.
Some 250 years ago, changes in agricultural technologies replaced much of farming’s human labor. The idle and starving masses and the ability to harness mechanical power brought people from the fields into the workhouses. And thus, modern capitalism was born. It ushered into society a greater distribution of wealth, and as capitalism and personal freedom expanded, they lifted much of the world out of abject poverty.
By the early 1970s, capitalism and democracy were preeminent and codependent and left all other rival systems trying to explain their failure; however, like a good party that got out of control, our Western economic system turned hedonistic. What worked in moderation, became vulgar when the volume was cranked up.
The 1970s began a nearly 50-year period where those with the most kept wanting more and optimized the political and economic system to get it. Drinking from the cup of plenty wasn’t enough. As John D. Rockefeller reportedly said, “How much is enough?” And so, the few with the most power and wealth elbowed the others out of the party only so they could store up drink they could never really consume let alone enjoy. While the few partied on, their stupor blinded them as to how poorly the party was going for the many, only to be shocked when the system they built started turning on them.
All over the globe the playground was changing, but not so much that the party had to stop. Strange actors showed up on the political scene, which made for good party conversation but strangely no one asked why. Could this be the effects of bulldozing so many out of the party? Nah, that can't be, they said. Look, there's more wine today than at any time in history. What could be wrong? The system is working; look at all this wine!
While the drunk seldom sees the excesses, those left to only watch have a more sober view. To them the problems are obvious, the excesses have a cost. Those excluded from the feast nonetheless want in, and the kids? They are just disgusted with everyone. The two groups work different problems, but their cause is unwittingly united; both know things have to change and have begun to demand it.
Change is always messy. Some of it is and will be change for change’s sake while some of it has promise for the future. But the future is always hard to see. For those left out of the party, there is a yearning for “the good old days,” and so they clamor for a return to the past as their selective memory recalls it. Younger generations don’t understand what was so great and don’t like what they see of it. They want a different future.
Business Roundtable Takes Stock of the Unrest
There are many ideas and no agreement, so change marches on in its clumsy way, and while the specifics are unclear, smart people can sense that change is inevitable. Some of the features of this change are coming into focus. They are inescapable and so a group like the Business Roundtable seeks to get on the right side of things. They acknowledge the need for change and point the way. Those are the signposts. They aren’t the future, they simply point the way, a new way, a turning point.
While significant, some were underwhelmed with the Business Roundtable’s proclamation. The founders of the B Corporation movement offered a response to the statement in the form of a full-page advertisement in the New York Times, saying, essentially, ‘talk is cheap'. Promises are nice, but unless the Business Roundtable’s definition is legally binding, it is nothing more than good PR.
As an impact investment bank and certified B Corp, EPOCH Pi has always believed there is a better way to do business; that you don’t have to sacrifice purpose to maximize profit. Our work helps conscious companies survive and thrive beyond the transaction so they can continue to influence, inspire, and exemplify how the power of business can have a profound, positive impact on all stakeholders. We’re glad to see that some big-name players, like the members of the Business Roundtable, are catching on.