Faced with global dissatisfaction with climate change, income inequality and working conditions, a coalition of major corporations pledged Monday to revise a long-standing corporate governance principle.
Shareholders, the coalition said, are not everything.
The statement from Business Roundtable, a collection of executives representing some of America's largest companies, offers a new definition of "the purpose of a company." A main business for a company should be promoting the interests of its shareholders, the group said.
The statement was signed by nearly 200 executives, including executives at Apple, American Airlines, Accenture, AT&T, Bank of America, Boeing and BlackRock.
"While each of our individual companies serves its own business purpose, we share a basic commitment to all of our stakeholders," said the group, led by Jamie Dimon, CEO of JPMorgan Chase. "We commit to delivering value to all of them, for the future success of our companies, our communities and our country. "
The Business Roundtable did not provide details on how to achieve this shift, and gave more of a mission than an action plan, but the companies promised to fairly compensate employees and provide "important benefits", as well as training and education. They also promised to "protect the environment by embracing sustainable practices across our businesses "and" promoting diversity and inclusion, dignity and respect. "
Since the 1970s, the Business Roundtable, which primarily serves as a lobbying organization, regularly publishing corporate governance principles that describe how a company should operate. Each version of these principles over the past 20 years has stated that "companies mainly exist to serve their shareholders," according to Monday's announcement.
"It has become clear that this language for corporate purposes does not accurately describe the ways that we and our other CEOs each day try to create value for all our stakeholders," the group said in its statement.
While the group cast the change in language as a recognition of business development, it was also a tacit acknowledgment of the increased control companies facing.
Lawyers in Washington are investigating the dominance of large technology companies such as Amazon and Facebook. Voters across the country have supported efforts to raise the minimum wage. And global concern about climate change is causing companies to reduce pollutant emissions.
"They answer something in the zeitgeist," said Nancy Koehn historian at Harvard Business School. "They perceive that business as usual is no longer acceptable."
Senator Bernie Sanders of Vermont, whose voice has been among the highest to ask businesses to take more responsibility in social matters, said he was happy that the Business Roundtable had recognized the dangers of the company's greed.
"But we need more than one publicity stunt," said Sanders, who has opposed corporate power as a cornerstone of his presidential campaign. "We need a concrete plan for how they will bring back American jobs abroad, pay all workers a living wage with good benefits, stop attacking unions and start paying their fair share of taxes."
Klaus Schwab chairman of the World Economic Forum, said that the acceleration of technological disruption of the traditional workforce had led to greater sensitivity to corporate social responsibility.
"The threshold has moved significantly to what people expect from a company," he said. "It's more than just producing profits for shareholders."
Mr. Schwab said the statement was an encouraging sign – but that companies needed to take concrete action, not just make big promises.
"That's right to do," he said. "But we have to keep putting meat on our feet."
Business Roundtable had been working with the new language for about a year, said Brian Moynihan, CEO of Bank of America.
"You can provide good returns for your shareholders and great benefits for your employees and run your business responsibly," Moynihan said in an interview.
While the new purpose clause represents a significant shift from the Business Roundtable's longstanding principles, it was not the first time the group took a position on a societal issue.
In August last year, the group condemned President Trump's immigration policy, describing family separations as "cruel and contrary to American values."
new statement represents an even broader shift, signaling companies' willingness to engage in questions about wages, diversity and environmental protection.
But without specific action, there are only words, said Anand Giridharada's author of "Winners Take All : The Elite Charade of Changing the World."
"If the Business Roundtable is serious, it should tomorrow focus on legislative proposals that will set the law in these boardrooms," he says.