raceAhead: Elizabeth Warren Takes on Shareholder Value

Sen. Elizabeth Warren speaks into a microphone, gesturing with her right hand
UNITED STATES - MARCH 6: Sen. Elizabeth Warren, D-Mass., holds a news conference in the Capitol on banking deregulation legislation on Tuesday, March 6, 2018. (Photo By Bill Clark/CQ Roll Call)
Bill Clark CQ-Roll Call,Inc.

In a new opinion piece, Elizabeth Warren, the Democratic senator from Massachusetts, outlines the guts of a new bill she’s introducing called The Accountable Capitalism Act. If it were ever to be adopted, it would have broad implications for some of the country’s biggest corporations.

The legislation would require corporations with more than $1 billion in annual revenue to obtain a federal corporate charter compelling their boards to look beyond shareholder value as their overarching directive. While it would be a pretty clear departure from Milton Friedman’s vision as outlined in his 1970 New York Times Magazine manifesto, “The Social Responsibility of Business is to Increase Profits,” she says it would also be a return to our earlier, capitalist roots. What is the true role of a corporation? “For much of U.S. history, the answers were clear,” she says. “Corporations sought to succeed in the marketplace, but they also recognized their obligations to employees, customers and the community.”

An emphasis on shareholder value has meant that large companies send the lion’s share of earnings to shareholders, enriching the wealthiest 10% of U.S. households, stagnating wages while increasing inequality, she says.

Put another way, if a corporation wants to enjoy the rights of personhood, they will also have to do their fair share to uphold the social contract associated with being human, “and not act like sociopaths whose sole obligation is profitability — as is currently conventional in American business thinking,” according to Matthew Yglesias in this explainer from Vox.

Of course, there are plenty of reasons to think that regulation won’t help, which leads to some familiar talking points.

Harvard University economics professor Jeffrey Miron told CNBC that the bill had little chance of improving capitalism and would instead “create a whole set of new rules that the federal government will enforce. Those rules will not be clean, explicit or simple… [and would create a] huge ability for companies to evade and avoid,” he said.

And so goes politics. But putting the legislative process completely aside, the role of the corporation in public life is an important conversation to have and one that is already happening in certain business circles.

Fortune’s own CEO Initiative immediately comes to mind. It’s a growing community of CEOs operating across a variety of sectors who are figuring out how to employ their considerable resources toward addressing the myriad issues facing the world today as part of their core business strategies. As a group, they are dedicated to thinking beyond shareholder value.

With Warren’s proposal in mind, I reviewed the coverage from our most recent gathering in San Francisco last June. Many participants appear to be operating under a charter of sorts, formed by an alignment of their business strength and values, with authentic leadership and a sense that they could actually make a measurable difference. Now, I realize this sort of “values” talk can sound like a bunch of buzzwords coming out of certain mouths, but it really is at the heart of the work.

Here’s just one example. HP’s CEO Dion Weisler talked about the company’s bold decision to tell their vendors to make gender and racial diversity a priority or prepare to be replaced.

“If you want to make a difference, be prepared to make the tough call. And so we did that,” he said. “That’s the power of being in the leadership position. That you can influence an ecosystem. That you can step up and lead as a leader across an organization larger than your own to make a difference in the things you really believe in.”

On Point

Who is showing black women founders the money?Here’s an update from the field from legal expert and start-up adviser Bari A. Williams. While fewer than 1% of black women founders get venture funding, there are some encouraging signs that the dismal benchmark may improve going forward. For one, there is new money in town: Richelieu Dennis, founder of Shea Moisture and owner of Essence Ventures launched the $100 million New Voices Fund to invest in black-women led companies. There’s also new venture talent in the pipeline, in the form of a new VC apprentice program associated with Silicon Valley Bank, specifically to train women of color. But systemic barriers remain in place: Most in the venture industry are still overwhelmingly white and male and mostly hail from Harvard or Stanford. Click through for some excellent advice from co-founder and CEO of Blavity, Morgan Debaun, who just raised $6.5 million in a Series A last July.Fast Company

Stephen Colbert worked overtime to get a diverse writer’s room
Like so many enlightened employers, talk show star Colbert asked for a diverse slate of candidates for his team. After being frustrated with the ratio – a packet of 150 possibles included only 8 women, he put his foot down. “Until I said no, only women, and then they sent me 87 women,” he told Sopan Deb in this TimesTalks. If you’re dealing with a system that’s not designed to deliver diversity easily, you have to make some noise. “We realized we had to take an extraordinary step to get an extraordinary room. And now it’s half, you know, white guys and half either women or writers of color.”

Ava DuVernay’s no-drama path to a diverse enterprise
DuVernay deserves all the praise she gets in this behind the scenes look at how she made sure the directors and crew of Queen Sugar, the series she adapted for the Oprah Winfrey Network from the book by Natalie Baszile, were women, many of them of color. “It’s unprecedented in this industry, what she has done. She was the first,” says showrunner Kat Candler. Her success has revealed an industry blind spot, according to Candler. “Prior to ‘Queen Sugar,’ you would go into meetings and have executives ... just racking their brains with, ‘How do we remedy this?’ It’s so simple. You hire women; you hire people of color; you hire new voices. You just hire. It’s not rocket science.”
The Lily

What Americans don’t know about China
Ben Harburg, a managing partner at Chinese venture fund MSA Capital, warns that American isolationism will all but guarantee that we’re raising a generation of workers utterly unprepared to understand, collaborate and compete with the economic juggernaut. He blames stereotypes, for one. “Popular U.S. media perpetuates constant negative narratives about China: ghost citiesreal estate bubblespollutioncorruption,” he says. “While many of these problems are real, the predominately negative coverage drowns out the positive elements of life in China and its abundant economic opportunities.” Some 25% of Chinese students are studying English, more than 300,000 students studied here in 2015, while the U.S. sent only 11,000 to China during the same time period. “The speed and scale of China’s rise has caught the U.S. academic, political, and business communities off guard,” he warns. Remove barriers for American students to study abroad and become familiar with Chinese language, culture, history, and economics before it’s too late, he says.


The Woke Leader

Black boys feel less safe in white neighborhoods
A new study by researchers from Ohio State University has found that black boys, ages 11-17, expressed a “decreased sense of safety,” when they were in neighborhoods with a larger white population than they were accustomed to. Black boys “will expect increased scrutiny, surveillance and even direct targeting as they traverse whiter spaces,” the study found, although the same was not true for girls. The study also took place during a time when stories of black kids being targeted for doing simple things – swimming, mowing lawns, selling cold drinks – had become common. “What is happening on the news, along with common knowledge, may be heightening black kids’ concerns,” says one of the researchers.
The New York Times

Traveling while black
It's not just black boys who have difficulty traveling. Writer Morgan Jerkins (This Will Be My Undoing) has curated a series of essays for Medium on the unique experiences of traveling while black, from being an outlier in first class, to the unexpected joy of letting your guard down and being accepted as a fellow traveler, to the familiar annoyance of having your natural hair molested by the TSA. “If I wear faux locs or any kind of extensions that give my hair volume, all I have to do is look at the X-ray screen and see a sizable yellow rectangle over the size of my head and know that a Black TSA officer will soon emerge out of nowhere and begin to course through my hair,” says Jerkins, kicking off the collection. 

Somewhere in the dream we had an epiphany, Now we right the wrongs in history
If you want a memorable musical metaphor for allyship, then take a few moments to enjoy this extraordinary performance of the Oscar-winning song “Glory”, from the Ava DuVernay film Selma about the 1965 marches for voting rights. John Legend and Common won Best Original Song at both the 2015 ‪Golden Globe Awards and the 87th Academy Awards. But the staged version, which was performed at the Oscar ceremony, offers a subtle lesson in grace in racial partnership that’s easy to miss. As the “marchers” fill the stage to sing during the dramatic finale, the white performers march shoulder to shoulder with the black ones – but stand in silent solidarity. The glory is in the details.


Usually when people talk about the “strength” of black women, they are referring to the way in which they perceive black women coping with oppression. They ignore the reality that to be strong in the face of oppression is not the same as overcoming oppression, that endurance is not to be confused with transformation.
bell hooks

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