Long-time readers are aware that I don’t view the end-goal of capitalism to be the accumulation of money, wealth, or even garden gnomes. From investors to CEOs, I have often said that the customers and employees come first, and if you can’t take care of them, wiggling your way to a profit regardless is so much a transgression that you might as well call it as secular sin: it hurts, rather than helps, society.
And now I have some company. A pack of CEOs from companies such as American Airlines, American Express, and others are at least signing a letter suggesting that they believe there’s things more important than their profits out there. Here’s the letter, minus the signatures:
Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.
Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth.
While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:
- 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.
Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.
Do they mean it? I guess we’ll find out. But it’s encouraging to see what might be considered thought leaders finally getting out the information that maximizing profits cannot be the be-all and end-all of corporate life – or it’ll be the end of corporate life. Some appear to have realized that the bumpy road ahead may be partly due to the past actions of their companies.
Not everyone agrees this is a good idea. WaPo claims, but I could not find, that the Council of Institutional Investors issued a statement:
… an association of pension funds, endowments and foundations, said it “respectfully disagree[s]” with the statement, adding that it “undercuts notions of managerial accountability to shareholders.”
A carefully chosen phrase, don’t you think? As if shareholders and their profits are primary. I’d be careful with that particular entity. They appear to be all about the money – no surprise, of course, given that they’re investors.
I’m glad I never started a company. The tension between profits and trying to render good service to the customer would have driven me nuts.
