Guest Articles

August 27

Margot Brandenburg

The Business Roundtable Announcement: How We Can Ensure It’s Part of a Paradigm Shift – and Not Just Window Dressing

By now, everyone who reads NextBillion has likely heard about the recent announcement from Business Roundtable (BR). Last week, 181 BR members, including many of the world’s largest corporations, signed a statement declaring that the purpose of a corporation is to create value for its stakeholders: employees, suppliers, customers and communities as well as shareholders.

Wow. Taken at face value, this is game-changing announcement. It reverses a decades-long commitment to shareholder primacy on the part of BR and its members. The statement is short on the details, but goes so far as to mention fair compensation for employees, “dealing fairly and ethically” with suppliers, and protecting the environment. I was part of a team at the Rockefeller Foundation that helped coin the term impact investing a decade ago, and in many ways this announcement is a critical validation of our work. It is, at the least, a major milestone in shifting public narratives.

While my LinkedIn feed – in all of its sample bias! – was filled with acclaim for the BR announcement, the thousands of reader comments made to news articles online were far more skeptical. Readers consistently described the announcement as a “mere PR effort” or “window dressing.” What really came through for me were the comments calling “for more action and less talk.” For those of us who believe that it is possible, and necessary, for companies to create value for all of their stakeholders – how can we prove the skeptics wrong? And, if we believe that many of these CEOs have a genuine desire to lead on issues of equity and sustainability, how can we make sure their commitment flows down to business decisions made far from the spotlight – by procurement officers, human resources directors, operations managers, etc.? In other words, how can we hold these companies accountable?

The answer will involve all of us – it lies not only with the companies themselves, but also with investors, policymakers and communities. Here are some ways each of these groups can contribute.



The boards of companies who signed the statement can immediately give teeth to their commitment with a few simple steps. For one, they can tie CEO or C-Suite compensation to non-financial metrics, such as value created for the workers, suppliers, customers and communities cited in the BR statement. They can also go a step further and make a legal commitment to creating stakeholder value by reincorporating as a public benefit corporation, and/or getting certified as a B Corp, as 10,000 companies have done across 60 countries – including public companies in Brazil, Australia and the United States. Finally, all companies can disclose better and more robust data on meaningful environmental, social and governance metrics – as well as, importantly, disclose their political contributions.



Ultimately, the intentional creation of long-term stakeholder value will also require investors to update and expand their definitions of fiduciary duty. Investors will either enable or impede realization of the BR commitments by choosing to support – or obstruct – the types of actions described above. Investors will have to expand their focus on quarterly earnings data to include a more fulsome consideration of long-term stakeholder value, and vote their proxies accordingly – including, in countries like the U.S., with periodic votes on CEO compensation.

Unfortunately, the leading industry voice for investors in the United States – the Council of Institutional Investors – chose to criticize the Business Roundtable announcement rather than endorse it. It may require action on the part of the next two groups to turn the tide of investor behavior.



In the United States, politicians of both parties – from Democratic Senator Elizabeth Warren to Republican Senator Marco Rubio – have sharply criticized shareholder primacy and proposed structural changes to the way corporations function. Policymakers around the world have a number of levers at their disposal, including disclosure requirements, tax policy, procurement policy and a wide range of other tools. (See Warren’s Accountable Capitalism Act for a roadmap of far-reaching policy proposals.)



Last but certainly not least, communities around the world can hold companies accountable for their stakeholder impacts. In the United States and elsewhere, consumer sentiment – some of it a direct outgrowth of political activism – has put significant pressure on companies to improve their policies and practices. In the global south, organizations like the Accountability Counsel work with communities affected by infrastructure and other projects to advocate for fair compensation. Examples include herders in Mongolia negotiating with mining company Rio Tinto, and Oaxacan communities seeking concessions from a major hydroelectric project in Mexico.


My bottom line is this: The Business Roundtable announcement is extremely exciting, for the normative shift that it signals and the potential impacts that it may yield. A large and influential group of CEOs have effectively drawn a line in the sand; it is up to us, as well as them, to hold them accountable to it.


Margot Brandenburg is founder and CEO of MyStrongHome, a benefit corporation that uses insurance-based financing to fund climate resilience.


Photo courtesy of Samuel Zeller.




corporate social responsibility, public policy