On the 3rd Anniversary of the Business Roundtable’s Redefined Corporate Purpose, Corporations Aren’t Living Up to Americans Expectations

This report was written by Jennifer Tonti, Managing Director of Survey Research & Insights

Key Findings

In 2019, the Business Roundtable redefined the Purpose of a Corporation, advocating for companies to move beyond the shareholder primacy model to lead their businesses to the benefit of all stakeholders – workers, customers, communities, suppliers, the environment, and shareholders. Over 100 C-suite signatories (which has now increased to over 250) pledged to evolve their operational model to ensure more inclusive prosperity, but the question remains as to whether or not companies are actually following through with those commitments.

This survey report focuses on the public’s perceptions of how large companies are doing overall, and in a related analysis we released today, we investigated if the signatories of the BRT purpose statement are actually outperforming their peers. (In short, yes.)

JUST Capital has been tracking the public’s perceptions of this issue, and our annual survey finds that the principles outlined in the Business Roundtable’s statement are as important as ever to Americans, yet they are hesitant to agree that, three years after the announcement, the nation’s largest companies are truly making strides to move away from the shareholder-centric model.

• More than nine in 10 Americans say it is important that the largest U.S. companies: 
  • • Promote an economy that serves all Americans (93%).
    • Build an economy that allows each person to succeed through hard work and creativity (95%).
    • Build an economy that allows each person to lead a life of meaning and dignity (92%).
• Yet roughly half agree that America’s largest companies:
  • • Promote an economy that serves all Americans (48%).
    • Build an economy that allows each person to succeed through hard work and creativity (54%).
    • Build an economy that allows each person to lead a life of meaning and dignity (48%).
• Majorities agree that companies continue to focus the lion’s share of attention and priority on their shareholders, especially in comparison to workers and customers:
  • • What is more, large majorities say large companies have a positive impact on shareholders (75%), more than double the percentage of those who say they have a positive impact on low-wage workers (31%).

Not Walking the Talk

The 2019 Statement on the Purpose of a Corporation was a major milestone for American business, a catalyst for C-suite leaders to lead their companies to the benefit of all stakeholders, not just their shareholders.

Since that initial announcement in 2019, JUST Capital has taken the pulse of the public each year to better understand its perceptions of how important these principles are, and whether America’s largest companies are following through with action.

The Business Roundtable’s 2019 Statement on the Purpose of a Corporation focused on the following, and an overwhelming majority (nine in 10) agree it is important for large companies to:

• Promote an economy that serves all Americans.
• Build an economy that allows each person to succeed through hard work and creativity.
• Build an economy that allows each person to lead a life of meaning and dignity.

However, when it comes time to evaluate companies’ follow-through on these goals, fewer than half of respondents say that large companies are doing well in delivering on any of them, with the exception of “Build an economy that allows each person to succeed through hard work and creativity,” where more than half (54%) say companies are doing well.

These proportions have not changed substantially over the past three years, save for a fleeting uptick in positive perception in 2021. But as we continue to wade through today’s economic climate, in which majorities of Americans’ top concerns include inflation and recession, the percentages who agree that companies are indeed working on a more inclusive stakeholder model that lifts up all Americans have dropped down to where they were in 2019 and 2020.

In a related analysis, our research team explored how signatories of the Business Roundtable’s Statement on the Purpose of a Corporation performed in our annual Rankings of America’s Most JUST Companies when it comes to overall and individual stakeholder performance. And while Americans perceive that big corporations overall are not following through, stakeholder performance by BRT signatories has trended upward in the last three years, signaling that companies that have made public commitments to serving all stakeholders seem to be following through on those commitments more than their non-BRT signatory peers. 

For instance, between 2020 and 2022, the composition of BRT signatories in the JUST 100 grew significantly, from 49% in 2020 to 62% in 2021, and plateaued in 2022, with 63% of signatories represented. Similarly, when we looked at individual performance on Worker, Customer, Community, Environment, and Shareholder scores in the Rankings, BRT signatories ranked higher on average than their Russell 1000 peers in every stakeholder group. BRT signatories on average rank in the top 32% across stakeholders, while non-BRT signatories rank in the bottom 46%. 

A Slow Crawl Away From Shareholder Primacy 

Since 2017, JUST Capital has tracked public opinion of the stakeholder group they believe companies are prioritizing most. Currently, 50% of Americans say shareholders command the most attention from companies, followed by employees (31%) and customers (19%).

Although that focus is clearly on shareholders, when comparing these responses to what the public said in our Annual Survey six years ago, we see significant changes in perception over time: the degree to which the public believes shareholders are the top priority has diminished, from 69% to 50%, and the percentage who say employees are the top priority has grown substantially, from 9% to 31%.

Companies Have a Positive Impact on Some Shareholders, But Not All

Relatedly, we ask the public in our Annual Survey whether companies are positively impacting various stakeholders. Results mirror the previous question: Respondents say companies have the greatest degree of positive impact on shareholders (75%); a significant margin over other stakeholders such as the environment (37%) and more than double the positive impact on the financial well-being of their lowest-paid workers (31%). 

Overall, a majority of Americans think companies are having a positive impact not just on shareholders, but their customers, the health and safety of their workers, the quality of jobs in the U.S., and the well-being of local communities. But less than 50% of Americans think companies are having a positive impact on society overall, the work-life balance of employees, the environment, and the financial well-being of lowest paid workers. 

Over time, the percentages who say companies have a positive impact on multiple stakeholders have not changed much from where they were in 2021.

Three years after the Business Roundtable’s announcement redefining the purpose of a corporation, the American public continues to doubt that companies are taking strides to truly elevate the needs of all stakeholders, especially those other than their shareholders. As we navigate the current difficult economic climate, it is imperative that companies take heed of the public’s perceptions and take more action to measuring up to new corporate purpose – to help build an economy that works for all.

Attribution

The 2022 survey was conducted within the United States by SSRS on behalf of JUST Capital between June 22 and July 11, 2022. SSRS interviewed a representative sample of 3,002 U.S. adults (age 18 or older) for this survey, which includes 540 Hispanic and 460 non-Hispanic Black respondents. The survey was conducted online among its online Opinion Panel, a nationally representative, geographically diverse, and probability-based web panel reaching respondents in all 50 states. The program was optimized so that respondents could complete it using a desktop or laptop computer as well as a mobile device. 1,063 completed the survey on a computer and 1,939 completed it on a mobile device.

The margin of error is +/- 2.7% at a 95% confidence level. Results were weighted to U.S. Census parameters for age, gender, education, race/Hispanic ethnicity, Census Division, and specifically surrounding party identification in order to ensure representativeness of the U.S. population. All margins of error include “design effects” to adjust for the effects of weighting. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact jtonti@justcapital.com.