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Guiding The Case 27 September Sep 2019 0749 27 September 2019

Business Roundtable, Sustainability Before Profit: when CEOs become new politicians

The CEOs of some of America's largest groups have signed a manifesto declaring that the environment and the well-being of workers must come before profit. The announcement is set to shake up their budgets radically, as well as our own idea of society

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It was recently announced that 181 CEOs of American companies of global size have officially declared that profit must no longer be the ultimate goal of companies. The Business Roundtable manifesto– as the 200-CEO-strong American think tank founded in 1972 by the then CEOs of Alcoa and General Electric is called – includes the signatures of people like Jeff Bezos of Amazon, Apple's Tim Cook, General Motors' Mary Barra and Walmart's Doug McMillon. It is a revolutionary announcement, not only because of the size and notoriety of these multinationals, but because it undermines what has so far been the vision of a world whose rules have been dictated by money. With this statement, the main US groups want to make it clear that the environment and the well-being of workers cannot be considered in the background of earnings, making a concrete effort towards sustainability rather than just budget numbers.

The Business Roundtable asks signatories to “invest in their employees, protect the environment, behave properly and ethically with suppliers, focus on the quality of the products and services offered, and create long-term value for shareholders.” An ambitious and very forward-thinking roadmap.

This change of perspective, led by JPMorgan’s CEO Jamie Dimon, is a reflection of the growing pressures that consumers, social media and workers are directing toward companies, especially larger ones. In fact, by operating internationally, these companies can have global impacts.

The Millennial generation, in particular, has been very sensitive to environmental issues in recent years, adapting their lifestyles and consumption also based on the behaviors of companies - deciding, for example, to boycott companies who have a bad reputation in terms of sustainability, and instead choosing those that prove to be the most "green". The change of course, to be honest, is also favorable to companies themselves. Just think of how complex it has become to scout and recruit: for some time now, to attract and retain the best people, pay is no longer enough of a lever. It is no longer only the company that selects the candidate, but the same prospective employees who actively “choose” who to work for according whether they feel that the values of the company are in tune with their own. All the more reason why a company that knows how to stand out positively can really have a competitive advantage over others.

The more companies take concrete measures to support, inside and outside their walls, the values they profess, the more they can prosper and the more the world itself can benefit

Corporate reputation, which this kind of activity leads to support, has in fact become a concept of fundamental importance, also in terms of turnover. And this is ever more true in the age of social: where good practice can go viral, increasing the visibility of the company, in the same way as a misstep can be enough to bring down credibility, often irretrievably.

So it is no coincidence that companies are working harder and harder to show adherence to values not only of environmental sustainability, by changing their internal processes and supporting, for example, youth movements to counter climate change, but also progressive, minority-focused and inclusion policies. The more companies take concrete measures to support, inside and outside their perimeters, the values they profess, in short, the more they are able to prosper and the more the world itself can benefit. It is in this sense that the CEOs of companies are becoming, in fact, political personalities capable of guiding the world.

The Business Roundtable manifesto is intended to shake the foundations of society, if not to change the fate of the planet, and it is therefore likely that such stances will be adopted elsewhere in the world. Despite the noble intentions, however, some people have not taken to the initiative.

According to the detractors of the manifesto, the content presented as revolutionary is actually very basic and so abstract as not to call for a real commitment. And according to the most skeptical, the declaration lacks a real program of change. Instead of empty and unrealistic statements, they say, large companies should focus on developing a true medium- and long-term strategy that ensures growth as much as protecting the environment and workers' rights.

To this the CEOs of the Business Roundtable respond decisively: “It's not just words”. Under Dimon's leadership, many have already approved measures such as wage increases for their employees, publicly taking position on various social issues. Others have decided to focus on the environment, investing in reforestation projects and funds to protect the seas. It is, after all, a matter of “raising the bar” and dictating a line that, sooner or later, will be adopted at a world-wide level. Well-being only becomes real if it is inclusive, and only by implementing concrete strategies to counter climate change can we ensure a livable future for all. As in all things, opportunities are created only for those who know how to be forward-thinkers: in the face of a fast-changing world, you cannot expect to do things as before. Just think of the evolution of technology, which has forced companies to adapt, changing their production processes and modernizing themselves. Why should it not be the same in social and environmental terms?

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