Voluntary virtue is never enough: The Business Roundtable’s statement is flawed, vague and patronising

The Business Roundtable's statement on the purpose of a corporation is a communications blunder, argues Neil Shoebridge. It sets out lofty goals, but no path to actually achieving them.

Last week, the Business Roundtable, an association of CEOs of some of the biggest companies in the US, issued a ‘statement on the purpose of a corporation’. The 300-word statement was a pledge by the 181 CEOs who signed it to not only focus on the interests of their shareholders, but those of ‘all’ stakeholders of their businesses. Broadly, that means looking after their employees, their community, protecting the environment and dealing fairly and ethically with their suppliers.

Makes sense right? Big business knows people are increasingly angry – and vocal –about how it treats employees, the harm it is doing to the environment, and myriad other issues. Signing a statement that says shareholder returns are not the only priority seemed like a good idea. It wasn’t.

The problem is that, as a piece of strategic communication, the statement is deeply flawed. It is vague. It doesn’t explain how its ideals will be turned into action. It is, in parts, patronising. It will be seen as corporate grandstanding, because it is.

A member of the roundtable, Johnson & Johnson chairman and CEO Alex Gorsky, says the statement “better reflects the way corporations can and should operate today. It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders”.

With all due respect to Alex, he is kidding himself. The statement makes the right noises about delivering value to customers, investing in employees, dealing fairly and ethically with suppliers, protecting the environment, supporting communities, and fostering diversity and inclusion, dignity and respect.

Johnson & Johnson’s Gorsky

But with no action plan and not even the vaguest suggestion as to how these lofty goals will be achieved, the statement is worthless. It doesn’t demonstrate any real commitment to tackling the problems it raises.

Clearly, the 181 people who signed the statement are not dumb; they wouldn’t be in the positions they are if they weren’t smart (or, at the very least, savvy). Presumably, they signed the statement with good intentions. Maybe each of them has a clear plan for their companies to turn the words in the statement into action. Hopefully, they don’t think that making the right noises about helping the world is going to change anything.

One of the great pitfalls of communication is over-promising and under-delivering.

Right now, the Business Roundtable’s statement is very long on promises and very, very short on delivery.

So why issue a hollow statement that could potentially do more harm than good?

“They’re responding to something in the zeitgeist,” Harvard Business School historian Nancy Koehn told The New York Times.

“They perceive that business as usual is no longer acceptable. It’s an open question whether any of these companies will change the way they do business.”

Nancy is being kind. Business as usual is more than “no longer acceptable”.

Business is usual is ruining too many people’s lives. Business as usual is killing the environment. Business as usual is making little real difference in fostering diversity and inclusion. Business as usual is, to many people, bad business.

The Business Roundtable’s charter is to “promote a thriving US economy and expanded opportunity for all Americans through sound public policy”.

It’s a lofty and noble ambition. But last week’s statement shows that 181 CEOs don’t know how to turn that ambition into a convincing plan that will start to change the way many people view big business.

Without real action, the statement on the purpose of a corporation is meaningless. No, worse; it’s vaguely insulting to anyone who is concerned about the issues it raises. And it’s a communication blunder.

Neil Shoebridge is partner at SK Media Group


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