The pandemic widens rifts; businesses need to help heal them

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Good morning.

The Business Roundtable’s statement last August redefining the purpose of a corporation (background here) was rightly seen as a seminal moment for “stakeholder capitalism.” But after talking with numerous CEOs on this topic, I remained unsure whether they saw it as significant change, or simply a description of the status quo.

Our new survey of Fortune 500 CEOs provides the answer. We asked the CEOs which of the following comes closest to their view of the Business Roundtable statement:

1. I agree with the statement and believe most good companies always have operated that way. Nothing changed.

2. I agree with the statement, and believe it represents a significant change in corporate thinking from a decade or two ago.

3. I don’t agree with the statement.

Only 4{4bae5313c1ffa697ce99995897f7847f1ebf3bca0fb7c37396bb602eb24323d3} of the CEOs chose the last answer–giving final burial to Milton Friedman’s notion that the social responsibility of business was to make a profit. But 63{4bae5313c1ffa697ce99995897f7847f1ebf3bca0fb7c37396bb602eb24323d3} chose the first one, suggesting the Roundtable statement reflected the status quo. Only 25{4bae5313c1ffa697ce99995897f7847f1ebf3bca0fb7c37396bb602eb24323d3} saw it as a significant change.

Count me with that second group, even though they are a minority. Having covered business as a journalist for four decades, I firmly believe something different is going on today in the way the best CEOs think and talk about their responsibilities to society. And that’s a good thing. The current pandemic is likely to widen the rifts that have plagued Western society in recent years—between knowledge workers and manual workers, the well-educated and the less-well educated, top tier cities and the rest. Businesses will need to play a bigger role in healing those rifts, or risk losing their operating licenses.

Also in the poll, we asked the CEOs whether the pandemic would:

1. Accelerate the move toward stakeholder capitalism, in order to address the human suffering caused by the crisis.

2. Slow the move toward stakeholder capitalism, as companies focus on shoring up their bottom lines.

3. Have no effect on the move toward stakeholder capitalism.

Almost half chose the first option, while just 18{4bae5313c1ffa697ce99995897f7847f1ebf3bca0fb7c37396bb602eb24323d3} chose the second. I hope they are right. The future of capitalism hangs in the balance.

More news below. Full results of the CEO poll will be out next Monday, as part of our annual Fortune 500 issue.

Alan Murray


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