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The End of Shareholder Primacy: CEO Daily

August 19, 2019, 10:22 AM UTC

Good morning.

Some breaking news: The Business Roundtable, which represents the largest U.S. companies, is releasing a new statement of corporate purpose this morning, and scrapping its old one.

The old one, drafted in 1997, puts shareholders first, above all other corporate stakeholders. The new one, which is 300 words long and can be found here, doesn’t mention shareholders until word 250. Before that, the group refers to creating “value for customers,” “investing in employees,” fostering “diversity and inclusion,” “dealing fairly and ethically with suppliers,” “supporting the communities in which we work,” and “protect[ing] the environment.” That’s a big change…and an important one.

Many of the CEOs involved—including JPMorgan Chase’s Jamie Dimon, Johnson & Johnson’s Alex Gorsky and GM’s Mary Barra–told me the updated statement better reflects the way they actually run their companies today. IBM CEO Ginni Rometty said the BRT also wants to “raise the bar” for all corporations to better focus on the needs of society.

I’ve written about what’s behind the BRT’s about-face, and how it represents a much broader change in the nature of business leadership, for the September issue of Fortune magazine. You can read my story here. At a time when U.S. political leadership is becoming increasingly polarized, having companies more consciously focusing their powers on solving society’s biggest problems is a good development.

Also out this morning: the 2019 Change the World list, which spotlights companies that are making measurable progress addressing specific social problems. It’s a testament to the change in business leadership that we were able to find so many great examples. You can read Editor-in-Chief Clifton Leaf’s commentary on the list here, and find the list in full here.

Prominently featured on this year’s list is Walmart, the only company to make our Change the World roster five years in a row. Click here to read Deputy Editor Brian O’Keefe’s exclusive in-depth interview with Walmart CEO Doug McMillon, in which McMillon talks about the challenges of automation, the imperative of retraining the company’s 2.2 million workers, and how he’s navigating the aftermath of the tragedy in El Paso.

Other news below.

Alan Murray


No Recession?

President Trump says he doesn't see any recession on the horizon. "We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money," he said yesterday. Trump reportedly called bank chiefs Wednesday, after the stock market tanked, to give him a "read on the health of the U.S. consumer." CNBC

Double Exposure

SoftBank is becoming doubly exposed in its quest to raise cash for its A.I.-focused second $100 Vision Fund—it's asking employees to invest, and it's lending them the cash to do so. The Japanese conglomerate is reportedly lending as much as $20 billion to employees, with three quarters going to CEO Masayoshi San. Wall Street Journal

Drone Attack

Oil prices are up following a drone attack on a Saudi oil facility, apparently perpetrated by Yemeni separatists. Saudi Aramco says the attack caused a fire at a gas plant but did not affect oil production. Meanwhile, OPEC has cut its forecast for demand growth, warning of a slight surplus next year. Reuters

Argentine Crisis

Argentina's economy minister has resigned, saying his team needs "significant renewal" in the context of the financial crisis that was worsened a week ago with President Mauricio Macri's shock defeat in a primary poll. Nicolas Dujovne will be replaced by the Buenos Aires provincial economy minister, Hernan Lacunza. BBC


Student Debt

Almost two-thirds of business economists surveyed by Bloomberg believe that cancelling student debt would negatively impact the U.S. economy. Said cancellation is a key campaign point for Democratic candidates such as Elizabeth Warren. The U.S. student debt level now comes to $1.6 trillion, and many people will die before they have completely payed off their loans. Bloomberg

Brexit Fear

U.K. government documents leaked on the weekend, showing that the now-likely no-deal Brexit would lead to food, fuel and medicine shortages. The new government of Boris Johnson claims the documents are old and don't reflect the planning that has recently taken place, but the opposition Labour Party is demanding that Parliament end its summer recess early to debate the crisis. Reuters

GE Claims

Fortune's Shawn Tully provides a deep dive into the duel between forensic accountant Harry Markopolos and GE, in which the former accuses the latter of hiding losses. He writes: "Is it really possible that a crack new CEO and board, armed with all the right credentials, can fail to understand a complex, opaque business to the point where what they think is a resurgent enterprise is really on the brink of failure?" Fortune

China Power

If there were to be an outright U.S.-China war, Chinese missiles would be able to cripple U.S. forces across the Western Pacific region within hours, Australia-based researchers have warned. Chinese military analysts disagree, saying the U.S. remains the region's superior power. South China Morning Post

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.