181 Top CEOs Have Realized Companies Need a Purpose Beyond Profit

On August 19, 2019, the Business Roundtable (BR) issued a memo entitled “Statement on the Purpose of a Corporation.” The Business Roundtable, one of the most preeminent business lobbies in the United States, includes 192 CEOs of leading U.S. companies from Apple to Walmart. Sandwiched between this spare title and 181 signatures was a one-page declaration that ended as follows: “Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.” The primary criticism of this kind of stakeholder capitalism is that any purpose other than shareholder profits results in lack of focus and, ultimately, corruption. If given the opportunity, these self-serving leaders would divert resources to their own enrichment under the guise of “purpose.” Larry Fink, CEO of Blackrock, in his 2019 letter to CEOs disagreed with this assumption, stating in bold lettering: “Purpose is not the sole pursuit of profits but the animating force for achieving them…Profits are in no way inconsistent with purpose—in fact, profits and purpose are inextricably linked.” This debate—whether purpose and profits work together or are fundamentally at odds with each other—can be informed by empirical research. This is the aim of our ongoing research initiative on corporate purpose. Our findings support the views of Larry Fink and now of the Business Roundtable: purpose and profit tend to go together.