It’s a sign of the times that such a statement needed to be made. In response to too many news stories about corporate greed and overreach, someone needed to challenge the doctrine of shareholder primacy — to say that corporations have more responsibility than just making money. Earnings should never come at the cost of human dignity, fairness or the common good. Monday’s announcement was the right thing to do, and long overdue.
But we’re also encouraged that Business Roundtable didn’t swing the pendulum of corporate function too far. The last of the five commitments they made Monday may be the most fundamental: to generate shareholder returns. A corporation, after all, is designed to do business, not to do charity.
We don’t happen to think those two things are at odds.
One of the greatest social goods a company can do is to become profitable. When companies succeed financially, they create jobs, innovation and growth. Conversely, when businesses fail to succeed financially, they cut jobs, abandon innovation and default on debt. It’s a simple formula: Healthy companies contribute to a healthy economy.
Of course, not every company that’s profitable is good for society. Companies with unfair labor practices, discriminatory policies or predatory vendor agreements are not the kind of successful corporations we applaud. A criminal enterprise may create enormous wealth for its owners, but do no good in the world.