When it comes to the social and economic prosperity of everyday citizens across the globe, what role do corporations play in achieving that? Some argue that business is one of the major drivers of economic prosperity. Some argue the opposite. For years, many have looked at large corporations and their leaders as self-interested: out exclusively for themselves and their investors. This view has long been propped up by the idea that corporations’ primary duty is to their shareholders alone. In reality, this view has been changing for some time, with more and more companies evolving to a broader view of the value they create; concepts including shared prosperity, triple bottom line and environment, social and governance (ESG) excellence are all part of this evolution. But until recently, it had not been expressly stated as a widespread commitment.
This is why the Statement on the Purpose of a Corporation, written by the Business Roundtable (an American organization with many similarities to the Business Council of Alberta), is revolutionary in how we think about, perceive and understand the nature of business. This statement is a commitment signed by over 180 of the largest companies in the largest economy in the world, stating that the purpose of a corporation is changing. It is no longer solely about shareholder value; it is about long-term value for all stakeholders—employees and their families, customers, suppliers, and yes, shareholders. A business is no longer about economic prosperity for a few, but it is now about economic and social prosperity for all.
The Commitment
These companies have committed to five core principles that define their purpose as companies.
- “Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
- “Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
- “Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
- “Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
- “Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.” Source: Business Roundtable
Why This Matters
This is not new, but it is important. In Canada and particularly in Alberta our companies have been focused on a broader set of deliverables for some time. Albertan companies in many sectors are ESG leaders, even if that hasn’t been how we are perceived.
According to the 2019 Edelman Trust Barometer, 79% of Canadians expect CEOs to lead change in areas such as skills training, equal pay, gender rights, discrimination and environment rather than wait for governments to debate and pass policy.
Customers want companies to take a stand and will change their buying behavior based on a company’s stand and action on certain issues. In fact, 64% of consumers worldwide are “belief-driven buyers”, and this behavior is more likely to occur when they don’t feel that governments or institutions are standing up for social issues they care about.
What’s more is that most employees (66%) expect their companies and leaders have a great shared purpose that positively impacts society, economically and socially.
People are asking companies to be more involved, and it’s clear that these companies are listening.
AlbertaBETTER
And so are we. The Business Council of Alberta was formed on the foundation of a more economically and socially prosperous Alberta for all those who call this place home. Our members are committed to building businesses that contribute to the long-term shared prosperity of our province, and to fulfilling their responsibility to build better lives, protect the environment, strengthen health and education systems and create opportunity for everyone to live the life they aspire to.
Business can be a force for good. And when business, government and society can work together to advance social and economic prosperity, we all benefit.