Corporate leaders turn away from shareholder-first ideology

Written on Sep 04, 2019

One of the U.S.'s most powerful business groups has abandoned the shareholder-first idea that has driven capitalism for decades.

The Business Roundtable said the pursuit of shareholder interests is no longer the central purpose of corporate America.

Companies should focus on social responsibilities as well as profits, the organization said.

Business Roundtable members include some of the biggest firms in the US.

The Roundtable released a statement signed by the heads of more than 180 US companies including the chief executives of Amazon, American Airlines and JPMorgan Chase.

The statement marks the first time the nearly 50-year-old group has said shareholder value is not the first priority. Shareholder primacy was an ethos championed by Nobel Prize-winning economist Milton Friedman and has been the foundation of corporate purpose.

The new mission statement comes at a time when companies are increasingly taking stances on issues outside of the corporate sphere due to pressure from activists amplified by social media and demands from their own employees.

The statement outlines five priorities, including commitments to invest in employees by providing fair wages and "important benefits," support communities where they operate and dealing ethically with suppliers.

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