In 2019, 181 of America’s top CEOs made a bold, collective statement to the world: A company’s purpose had to be more than just making a return for its investors. This powerful group argued that there are other stakeholders in the equation that companies need to be answerable to, including customers, employees, suppliers, and the communities these companies serve. This statement flew in the face of the long-running capitalist mantra of maximizing shareholder value, and many experts argued that it was about time. Being the CEO of a publicly traded company today is a whole different ball game than what it was even two decades ago. Consumer activism is far more prevalent today thanks to access to social media. One study estimates that about 38% of all Americans boycott at least one company at any given point in time, with the number of boycotters growing double digits annually. The Fairtrade movement, which ensures that suppliers such as farmers get paid fairly, has been consistently growing in popularity for the past several decades. The conspicuous impact of the Black Lives Matter movement as well as the divisive presidential term of Donald Trump highlighted that companies could no longer remain indifferent to the political opinions of the communities they served. All these macro trends, coupled with an increased urgency around climate change, meant that the public at large warmly welcomed corporate America’s new statement of purpose. For the optimists among us, it appeared that corporate America had finally taken the first step to discovering its soul. Yet, nearly two years later, we do not have much to show for it. In fact, just a few months ago, one of the more prominent advocates of the corporation-with-a-soul movement, Danone CEO Emmanuel Faber, was unceremoniously removed from his position. Shareholders ousted Faber because he could not generate a return for them during his tenure as CEO. Ironically, his public firing did not generate any uproar from the other stakeholders he had focused on serving. A sobering reality Corporate accountability can be a tricky thing to get right. Despite their elite statuses and high-compensation levels, most CEOs and top managers operate within the same framework as regular employees. They get hired for top jobs based on their skills, networks, and experience, are incentivized to perform well and can get fired if they don’t.
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After claiming to care about more than profit, corporate America still hasn’t found its soul