Step Aside, Shareholders: Businesses Revise Statement on Whom They Serve

The revised statement of purpose was signed by 181 CEOs from the Business Roundtable, including several making waves in the healthcare sector.

For the past 22 years, the Business Roundtable's statement on principles of corporate governance has affirmed the notion that corporations exist primarily to serve their shareholders. Not any longer.

The association of CEOs released a superseding statement Monday that says corporations exist for the benefit of all stakeholders, including not only shareholders but customers, employees, suppliers, and communities as well. The statement was signed by 181 CEOs who say they will lead their companies in accordance with these principles.

The list of signatories includes several business executives who have been making waves in healthcare, including CVS Health President and CEO Larry Merlo, Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina, Anthem President and CEO Gail Koziara Boudreaux, Cigna President and CEO David M. Cordani, Walmart President and CEO Doug McMillon, Apple CEO Tim Cook, and others.

Amazon Founder and CEO Jeff Bezos and JPMorgan Chase & Co. Chairman and CEO Jamie Dimon—who lead two of the three deep-pocketed firms backing Haven's efforts to remedy healthcare's "hungry tapeworm" effect on the U.S. economy—are also on the list.

"The American dream is alive, but fraying," Dimon said in a press release. "Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community's unwavering commitment to continue to push for an economy that serves all Americans."

The statement on the purpose of a corporation includes five commitments:

1. To deliver value to customers.
2. To invest in employees.
3. To deal fairly and ethically with suppliers.
4. To support the communities in which the business operates.
5. To generate long-term value for shareholders.
    

"This new statement better reflects the way corporations can and should operate today," added Johnson & Johnson Board Chairman and CEO Alex Gorsky, who is also chair of the Business Roundtable Corporate Governance Committee. "It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders."

The revised statement defies a central tenet of Milton Friedman's teachings on business ethics, as Fortune's Alan Murray wrote in a detailed article for the September edition of the magazine, which went live online Monday. While the revised statement of principles may seem sudden to some, it has really been a long-running evolution, Murray wrote.

"I've covered business as a journalist for four decades and, over that time, have conducted hundreds of interviews with CEOs of the largest corporations in the U.S. and across the globe," he wrote. "In the past few years, it has become clear to me that something fundamental and profound has changed in the way they approach their jobs."