The Future of Capitalism: CEO Daily
I’m at Fortune‘s Most Powerful Women summit, where yesterday I was allowed to listen in on a fascinating off-the-record discussion among CMOs of some of the world’s largest companies. One of the topics they covered was “values washing” and “purpose washing”—a reference to companies that promote their values and purpose as a PR exercise, rather than backing them with action. It’s concern about such PR activities that led Senator Elizabeth Warren to attack the Business Roundtable’s August statement of corporate purpose, and to ask the group to show her the meat.
Last night, the Business Roundtable responded. In a letter from BRT CEO Josh Bolten sent to Warren—and shared with CEO Daily—the group pointed to four areas where companies have taken significant action that demonstrates their commitment to help achieve public goals.
- Minimum wage: “Many of our companies have taken steps to increase their own company minimum wage.” And the BRT itself now supports an increase in the national minimum wage.
- Infrastructure: “Business Roundtable members have been active in pushing for significant and sustained investment to modernize and rebuild America’s infrastructure.”
- Training: This has been a particularly strong focus of many BRT members, with new programs to create economic opportunity for the disadvantaged.
- Data privacy: The BRT has called on Congress to pass new legislation protecting consumers’ data.
In the letter, Bolten attacked Warren’s proposal calling for national legislation to change the way companies are governed. “While we share the goal of increasing economic opportunity for all Americans, we believe the Accountable Capitalism Act would not advance that goal and, in many respects, would be counterproductive, hurting the very people we want to help. Given our diverse economy, business decisions about how best to serve employees and deliver high-quality goods and services to customers require flexibility within the private sector. Creating a new government entity to oversee those decisions would undermine U.S. competitiveness and result in less innovation.”
The argument is a preview of what is shaping up to be a key debate of the 2020 election: can the private sector be trusted to address the most pressing needs of society? And if not, can government regulation of those companies help? I see more and more companies backing up their purpose and values statements with real action these days. And I see little reason in history to believe that Warren’s legislation regulating corporate governance would be an effective alternative. But the battle lines are drawn.
More news below.
President Trump is keeping U.S. troops in northeast Syria to guard oil fields, and has floated the idea of having a U.S. oil company come in to develop the fields. Trump: "I always said if you're going in, keep the oil." The issue is that the oil belongs to the Syrian state, and oil companies are unlikely to want to get involved. Wall Street Journal
Today marks the start of New York state's unprecedented lawsuit against Exxon Mobil, which it accuses of misleading investors about the cost of climate regulation. New York alleges that Exxon's internal documents show it was using higher forecasts of climate-related costs for evaluating new projects, compared with the figures it was showing investors. BBC
Justin Trudeau's Liberals are the winners of yesterday's elections, but without a majority. So Trudeau's minority government will need to be propped up by one or more smaller parties. Meanwhile, in Israel Benyamin Netanyahu has given up trying to glue together a coalition following that country's inconclusive election; rival Benny Gantz will now get a shot at building a workable government. USA Today
Yesterday's $260 million settlement between two Ohio counties and Teva, McKesson, AmerisourceBergen and Cardinal Health could pave the way toward a global opioid-epidemic settlement. That's according to attorneys acting for the plaintiffs, who want to see drug companies come to the table regarding a final resolution. Washington Post
AROUND THE WATER COOLER
A McKinsey survey suggests that most of the world's banks are too weak to weather a serious economic downturn. The consultancy advises more mergers, along with the development of technology that can help ward off the threat of fintech startups. Bloomberg
What happens to Big Tobacco if vaping goes up in smoke, due to health fears? Companies could fall back on "heat-not-burn" technology, which mildly vaporizes tobacco without using the aerosol technique that has people so worried. Fortune
Facebook, Twitter and other big tech firms have not yet figured out how to spot deepfakes (A.I.-faked videos of people), though they recognize the sort of threat they could soon pose, once the technology becomes convincing enough. Facebook is also yet to devise policies around deepfakes. Fortune
Dollar millionaires now own around 44% the world's wealth, according to Credit Suisse's new Global Wealth Report, which also says there are now nearly 47 million millionaires out there (an increase of 1.1 million over the last year, mostly from the U.S., though China and Japan also added quite a few). That's 0.9% of the world's population; 56.6% of people have less than $10,000 to their name, collectively accounting for 1.8% of wealth. CNBC