Business Roundtable Statement on the Role of Business in Society: What’s New?

Debates about the role of the company in society remain lively, although the proponents of the doctrine, according to which only the maximization of shareholder value should matter, are less and less audible. In fact, their arguments are becoming more and more difficult to convince at a time when the detrimental effects of management and management practices associated with value creation for shareholders alone are more obvious every day (excessive focus on performance period to the detriment of long-term performance, minimalist view of corporate contribution to its ecosystem and to society, excessive funding of strategies, etc.)

In this context, the recent Pact Act calls on French companies to redefine their performance and the means used to achieve it. For a narrow view of their role in society, many organizations now oppose, by implementing it, a more global vision that integrates their social and environmental impacts. Danone, who had been a pioneer in the operationalization of the concept triple bottom line (an assessment of performance on the three complementary dimensions economically, socially and environmentally), no longer stands out so much today at this point from many other companies that have endorsed a more responsible vision of their activity and performance.

Thus, new relationships with their partners, who are customers, suppliers, even competitors, are experienced, in line with the idea of ​​economic peace that some researchers are calling for.

Across the Atlantic, the recent declaration in favor of “stakeholder capitalism”, signed on August 19 by 181 CEOs of major US companies, including the executives of Apple, Boeing, Johnson & Johnson, Amazon and even JPMorgan Chase, on same way .

“The Company’s 2 Missions: 2 Versions of Capitalism”, Olivier Sibony, Professor Associated with HEC (Xerfi Channel, September 2019).

Influence of public policy choices

It was in 1972 that John Harper, CEO of the Alcoa Group, and Fred Borch, CEO of General Electric, created the “Business Roundtable”, which brings together the leaders of the largest U.S. companies (211 members today) . The stated goal was then to make their voice heard in the public debate at a time when citizens’ hostility to large corporations was beginning to emerge and where federal rules of the labor market were perceived as a danger.

Excerpt from the “Consumer Protection Act Memo” from 1977.

It is this organization that has largely demonstrated its effectiveness in the past by significantly influencing American decisions and public policies (which in particular contributed as its first weapon to the failures of the 1975 antitrust bill and the establishment of a consumer protection agency in 1977). ), which caused a sensation by publishing a text that seemed particularly subversive on the other side of the Atlantic, in which the primacy of shareholders is less spontaneously questioned.

Signatories are committed to “delivering value to their customers”, “investing in people”, “treating suppliers fairly and ethically”, “supporting the communities in which they work”, “protecting the environment” and “generating long-term shareholder value”. Nothing really new in terms of what has been recommended by the stakeholder theory since the 1970s, or more recently the concept of “symmetry of attention”.

Nor anything new in terms of practices for companies that have hundreds of years (known as “Henokians”) who, and this is undoubtedly the key to their sustainability, have always been able to work for all their stakeholders without ever to sacrifice some of them. .

While there may be a vicious circle between profitability (a measure of shareholder value creation) and competitiveness (a measure of customer value creation), enabling the dynamics of robustness and sustainability, a vicious circle may also exist. quickly take hold when the search for profitability outweighs other perceptions of performance.

Many companies sinking into the pitfalls of “quarterly capitalism” have thus disappeared in the absence of being able to dampen opportunities to improve short-term profitability to the detriment of investments preparing for competitiveness and future profitability.

For here lies precisely the nature of the choice to be made: are we able to give up a little short-term profitability in order to improve competitiveness, establish sustainability and undoubtedly create more profitability in the long run? Aware of the excesses associated with short-sightedness, many leaders, who in a very utilitarian way and without showing signs of philanthropy, have understood where their and their company’s interest lies.

A limited ambition

Finally, the ambition in the declaration of 19. August limited and not very innovative at a time when global warming undoubtedly requires reactions of a completely different order (drastic reduction of our environmental footprint, development of solidarity with migrants climate change, etc. So many solutions not given in the recent statement , which this is clearly not the purpose of, and which ultimately encourages a small increase in stakeholder attention). However, the commitments made have the advantage of involving world-class players who have so far been only slightly involved, although some are already doing more than they promised.

If the actions are there, the potential for the dissemination of the principles adopted throughout the economy, especially among SMEs, will be significant, we can nevertheless hope. In fact, the targets for large listed companies tend to have rapid and strong consequences for EITs, SMEs and VSEs, which, integrated into value chains driven by large companies, see themselves exposed by the latter to evolving performance designs. proven, for example, by the work of American sociologist Gary Gereffi.

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