In 2019, the Business Roundtable, a non-profit organization featuring the CEOs of major American corporations, released the statement entitled “Statement on the Purpose of a Corporation”. It’s less than one page. The declaration is not a commandment – but a reflection of what at least the 181 signatories seemed to think was a guiding principle for the future. What was new? Corporations have shifted the debate from a purely shareholder-centric (profits) focus to a stakeholder-centric focus. In other words, fewer shareholders and more stakeholders.
Yes, it’s a crack in Milton Friedman’s famous thesis that a company’s sole purpose is to make a profit. Corporations finally realize that focusing solely on financial gain is not sustainable in the long term. Nor is the debate binary, choosing between profitability and social, environmental and governance responsibility – simply because the paths are converging.
From 2019 to today, the future arrived fast. The pandemic and the war in Ukraine have accelerated the course of events that put stakeholder concerns at the heart of the business calculus. And who are these stakeholders mentioned in the “Statement on the Purpose of a Corporation”? Customers, employees, suppliers, communities and shareholders. Let’s talk about suppliers.