(Bloomberg) -- A group of Republican state treasurers called on the Business Roundtable to reverse a position it took five years ago that says a corporation’s purpose is to serve employees and communities as well as shareholders.
Amid growing public discontent over income inequality and rising costs for health care and higher education, the Business Roundtable, which represents some of the world’s largest companies, said in 2019 that it would shelve the long-held view that companies should prioritize shareholders’ interests. The decision was backed at the time by 181 signatories, including JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon and BlackRock Inc. CEO Larry Fink.
In a letter to the Business Roundtable on Wednesday, GOP officials said the statement was “fatally flawed” and that institutions of all kinds are being pressured to depart from their proper purpose to serve a “left-wing ideology.”
“American companies must focus on maximizing returns,” the group of 14 treasurers from Alabama to Wyoming wrote. “That process necessarily includes taking care of stakeholders along the way.”
The letter comes on the back of a years-long attack by Republican politicians on the environmental, social and governance invetment approach. They’ve launched investigations into Wall Street’s ESG efforts, introduced anti-ESG bills — many of which have failed — and filed lawsuits. They also have pushed to thwart efforts to diversify workforces.
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Jennifer Cummings, a spokeswoman for the Business Roundtable, referred to an essay the group published on Aug. 16 that said the 2019 effort to redefine corporate purpose reflected the view that the best-run companies focus on producing good products and services. They also offer fair compensation and “excellent” training; create mutually beneficial partnerships with suppliers; and take care of communities they do business in.
“In the long term, the interests of a company’s stakeholders are inseparable,” the group said. “No single stakeholder will succeed unless they all do.”
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