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The B Corporations Want the Business Roundtable to Prove It

The takes are still coming in about last week’s pronouncement from the Business Roundtable, and one group, in particular, would like to see them put their money where their mouth is. Round Numbers Last week the Business Roundtable, a consortium of 181 of the top corporations in the world lead by JPMorgan CEO Jamie Dimon, released a statement rethinking “the purpose of a corporation.” In Dimon and Co.’s opinion, a business should no longer make decisions solely on whether it will drive profits for shareholders but should take into account “all stakeholders,” meaning employees, customers and the greater community. This move elicited a great number of opinions, ranging from measured support to skepticism to outright derision. And the takes are still coming in! Queen Bs The main criticism against the Roundtable statement is that the companies are not legally required to be true to their word. But they could be, if they meant it, according to some. In an open-letter full-page ad in The New York Times and an editorial in Fast Company, a coalition of 30 Benefit Corporations, aka B Corps, including Ben and Jerry’s, Patagonia and Kickstarter, had some advice for the Roundtable. Being a B Corporation means you’re legally allowed to value long-term goals and social concerns such as the environment, ahead of short-term profits for shareholders. In the letter, the B Corp founders urge the Roundtable companies to move to a similar model of stakeholder governance over shareholder primacy, arguing that “People are demanding a new social contract between business and society in which business and the capital markets create long-term value for all stakeholders.” In other words, the Roundtable businesses need to prove they are serious by joining the ranks of the other 9,000 B Corps who publicly adhere to rules that prioritize purpose over profit instead of letting a company’s directors make those calls piecemeal via a non-binding pledge. Opinions. Everyone Has Them The Roundtable sure does appreciate the feedback, as it released a statement thanking the B Corporations and the socially-minded non-profit Just Capital foundation, which also urges further action, saying it looks forward to working with everyone on some as of yet undefined “next steps.” Meanwhile, the pro-shareholder group Council of Institutional Investors isn’t exactly thrilled with all of this shareholders shade, and has pointed out that so far the Roundtable is being too vague about how they are going to make these changes, which the organization believes should be the government’s job, not businesses. -Michael Tedder Photo: Fred Prouser/REUTERS