Business as usual is no longer acceptable, was the message of 200 corporate leaders on August 19, when the Business Roundtable issued a "Statement on the Purpose of a Corporation." No longer should the primary purpose of companies be to maximize profits for shareholders, they argue. Just as important as rewarding investors is using the power of business to build a better society.
Roundtable members committed to building up local communities, investing more in employees, fostering diversity and inclusion, embracing sustainable practices, and a number of other goals that would prioritize social benefits over shareholder reward. CEOs adding their signature to the pledge included Apple's Tim Cook, JPMorgan Chase's Jamie Dimon, Amazon's Jeff Bezos, IBM's Ginni Rometty, and GM's Mary Barra.
Moving corporate social responsibility from the fringes of corporate charters to their core has been discussed for decades. Here is research and writing from Harvard Business School that discusses both the concept in theory and examples of CSR in practice.
A Good Place to Start
Statement on the Purpose of a Corporation
"While each of our individual companies serves its own corporate purpose, we share a fundamental
commitment to all of our stakeholders...," states the Business Roundtable.
Corporate social responsibility in theory
How to Heed BlackRock's Call for Corporate Social Responsibility
BlackRock's Larry Fink is challenging CEOs to serve a social purpose as well as a financial one. Institutional change expert Julie Battilana discusses what it will take to create this "transformation of capitalism."
Why Politics is Failing America, and What Business Can Do To Help
How could a country that epitomized the success of modern democracy have fallen into such a state of failure? Michael Porter and Katherine Gehl find a rigged American political system that limits competition and works against the public interest.
Green Businesses Are Incredibly Difficult to Make Profitable. Try It Anyway
Making a business successful is a challenge in itself, but making a green business profitable is an even harder journey. For society's sake, entrepreneurs must be prepared to make that journey, says Geoffrey Jones.
A Pragmatic Alternative for Creating a Corporate Social Responsibility Strategy
Many companies preach and practice corporate social responsibility, but their efforts often lack an overall strategy that dilutes their effectiveness. "Kash" Rangan and colleagues offer a pragmatic solution.
Why Business Should Support Employees Who Are Caregivers
Shifting demographics are causing an increasing number of people to act as caregivers for family and friends—but employers seem hardly to notice the trend. Joseph Fuller discusses why companies should support them.
Should US Companies Still Care About the Paris Climate Change Agreement?
American President Donald Trump pulled out of the 2015 Paris agreement on climate change one year ago. Vincent Pons discusses what it means for US business leaders in confronting environmental challenges.
4 Ways Managers Can Exercise Their 'Agency' to Change the World
In the face of today’s many messy problems, businesses must strive to help find solutions, argues George Serafeim. Managers who learn to exercise their “agency” at every level will be in the best position to create change.
Corporate social responsibility in action
Activist CEOs Are Rising Up—and Their Customers Are Listening
Are product sales affected by the CEO's stance on political and social issues? Michael Toffel and Aaron Chatterji study how consumers react to vocal chief executives.
Why JPMorgan Chase Is Investing Millions in Detroit
JPMorgan Chase is making extensive investments into the revitalization of Detroit. What does it expect in return? Professor Joseph Bower and JP Morgan executive Peter Scher discuss the challenges and rewards of partnering with cities.
These Entrepreneurs Take a Pragmatic Approach to Solving Social Problems
Using business to create social change has been at the center of many entrepreneurial efforts by Harvard Business School alumni. Howard Stevenson discusses their pragmatic approaches to overcoming long odds.
Should a Pension Fund Try to Change the World?
Can inclusivity, sustainability, and better governance boost economies? Rebecca Henderson and George Serafeim discuss the impact investing efforts of GPIF, Japan’s government pension fund.
How a Coal Polluter Became a Renewable Energy Leader
Enel, Italy’s state-owned power company, was one of Europe’s largest coal users and polluters. Now it is recognized as a leader. Mark Kramer discusses how Francesco Starace drove the huge strategy shift.
Research Papers
Rehabilitating Corporate Purpose
Shareholder value maximization has become the de facto expression of the institutional purpose guiding many managers’ decision making. Malcolm Salter proposes an alternative, justice-based guideline for corporate purpose based on established moral and organizational principles.
Corporate Sustainability: A Strategy?
Between 2012 and 2017, companies within most industries adopted an increasingly similar set of sustainability practices. This study by by Ioannis Ioannou and George Serafeim examines the interplay between common and strategic practices. This dynamic distinction helps for understanding whether and how sustainability practices can help companies establish a competitive advantage over time.
Investors as Stewards of the Commons?
With long enough time horizons and significant common ownership of companies within the same industry or supply chain, investors could serve as vehicles for the establishment and/or stability of collaborations between companies, argues George Serafeim.
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