Last August, nearly 200 of the world’s top business executives announced a new purpose for their corporations. Maximizing returns for shareholders would no longer be the defining mission of their companies, they said in the historic Business Roundtable commitment.
They pledged that moving forward, their bottom lines would include the interests of broader stakeholders: employees, communities, future generations. It was a hopeful declaration that would see companies’ traditional corporate social responsibility (CSR) efforts shifting from peripheral programming to driving an integrated ethos.
But the world has dramatically changed since then. In the face of economic turmoil driven by a once-in-a-generation global pandemic, will these corporations remain devoted to purpose?
The crucible events of 2020—the COVID-19 outbreak and a reckoning with racism in both our country’s past and present—have exposed America’s vast social, health, and economic disparities. Black and Latino populations—who disproportionately make up “essential” workers and are less able to self-isolate—have contracted COVID-19 at rates up to three times as high as white Americans. And Black Americans are up to six times as likely to be killed at the hands of police as white Americans. These recent events are clear reminders of our country’s lack of progress on equality and demonstrate why last year’s proposed concept of purpose is more important now than ever.
True, corporate America stepped up during the early days of the coronavirus, donating capital and personal protective equipment and engaging in other efforts to address the crisis. And while many companies have offered performative gestures in support of the Movement for Black Lives, some have committed to real change and supporting worthy causes.
But we cannot allow these to be here today, gone tomorrow commitments. The pledge made last year was for the long term, as the business leaders committed to “the future success of our companies, our communities, and our country.”
A retreat from purpose would not be without precedent, after all: Other black swan events, including 9/11 and Hurricane Katrina, initially saw a post-event surge of corporate social responsibility, only to see those efforts wane as business objectives turned to financial recalibration and growth. (One survey of 264 Fortune 1000 CEOs conducted in 2002 reported that 36% of respondents said their company “is more conscious of corporate social responsibility” as a result of 9/11, but only 9% reported spending more money on CSR.)
Charitable organizations like ours celebrated the Business Roundtable pledge, hoping to find more willing partners to walk hand in hand in support of our various missions while unlocking their purpose and driving value to their companies and stakeholders.
In the months following the Business Roundtable announcement, our optimism proved to be warranted. We welcomed those who wanted to go deeper in service to social good. Corporations invested in charitable organizations as partners in new, creative ways. This resulted in better outcomes not only for our missions, but also for the corporate partners, many of whom saw increases in revenues, audience loyalty, and employee recruitment, retention, and overall satisfaction.
A study last year, for instance, showed that job listings that highlighted a company’s social good initiatives had 25% more applicants than listings that highlighted the same position’s salary range. The researchers surmised that the company would have to raise salaries by a third in order to compete with simple messaging of social impact.
A different study in October demonstrated the importance of CSR for consumers: 600 adults surveyed said they want to know what the brands they support do for the benefit of advancing social and environmental issues (and 46% are influenced by this information when they make a purchase.)
The Business Roundtable announcement wasn’t without detractors, however. Cynics argued the move was largely a publicity stunt to mollify a frustrated public, who assigned blame to corporate America for many of the country’s greatest ills, from income inequality to climate change.
But there is no place for cynicism in my line of work. At our core, charitable organizations are powered by the fires of idealism and a resolute belief in humanity’s kinder attributes. Our heroes are the ones who have walked intentionally toward social good, amplifying unheard voices and embracing inconvenience in exchange for more just outcomes for all.
Despite all of the challenges the corporate world is facing, it cannot back down from the Business Roundtable commitment. In fact, that pledge is even more urgent now than when it was made in the midst of relative prosperity a year ago. Charitable organizations are well positioned to assist by reminding corporate America of its self-proclaimed purpose and offering ways to help it stay true to those ideals.
As we move forward post-COVID-19, I urge corporations to stay committed to the pledge and to partner with charitable organizations to help build a better tomorrow for all. In the midst of death, sickness, racial and social injustice, and economic hardship, our world needs these partnerships now more than ever. Lives hang in the balance.
Richard C. Shadyac Jr. is president and CEO of the American Lebanese Syrian Associated Charities (ALSAC), the fundraising and awareness organization for St. Jude Children’s Research Hospital.