The top executives of nearly 200 leading companies in the U.S. issued a statement Monday that tries to redefine progress in the business world. Instead of a sole focus on maximizing profits and share prices, stated the influential Business Roundtable, corporations must now deliver value to a range of constituencies, such as employees, local communities, and society writ large, not just the owners who have risked their money.
“Each of our stakeholders is essential,” said the statement. The Roundtable also proposed a broad vision of protecting the environment, investing in workers, and dealing ethically with suppliers.
In other words, instead of corporations being merely value driven – as in the legal obligation for financial returns to investors – they must also be values driven, for example in being accountable for their actions to a wider range of interests. The twin goals reflect a sophisticated balancing of what are often seen as competing forces.
This is not the first time the Roundtable has changed its view on the purpose of a corporation. And it may not be the last. Almost any company must continually seek ways to measure success against the shifting demands and rising expectations of those inside and outside the firm. One sign of a recent shift: A July survey for Fortune magazine found nearly two-thirds of Americans say a company’s “primary purpose” should include “making the world better.”
Almost as a rule, progress entails frequent improvements in the statistical yardsticks for determining progress. The search itself suggests a motive to forge a consensus on ways to better serve others as well as one’s own interests.
At the global level, the definition of progress has been in rapid churn over recent decades. One reason is a general desire to move beyond a common measure of a nation’s success: growth in gross domestic product. That single statistic, first devised in 1941, is seen as too narrow. Both governments and academics have struggled to go beyond merely measuring material progress and prosperity.
The United Nations has devised a “human development index.” In 2009, France gathered top thinkers to come up with statistical tools for calculating social goals, such as income equality and happiness. The European Union has proposed “sustainable development indicators.” The club of wealthy nations known as the Organization for Economic Cooperation and Development has an ongoing project to measure “the progress of societies.”
The search continues to put numbers on concepts such as “well-being,” “sustainable development,” or “scientific advancement.” Yet the point is not so much to find the holy grail of one or more numbers. The pursuit itself is to elevate the idea of progress for all. Like today’s corporations, the vision just needs to be expanded to include everyone.