Since the Business Roundtable, a club for chief executives at some of the most high-profile companies in the US, announced in 2019 that it was in favour of prioritising stakeholders over shareholders, there has been much talk about the nature of big business changing.

But a close of examination by academics of the companies involved reveals not much has changed. Indeed, the statement, the researchers say, seems to have been “for show” and served to head off government intervention.

After reviewing documents from more than 130 companies signed up to the Business Roundtable’s (BRT) Statement of the Purpose of the Corporation, Lucian Bebchuk and Roberto Tallarita of Harvard Law School, find that companies such as JPMorgan Chase, Apple, Amazon and Pfizer—among others—have made no changes in company statements that indicate a corporate purpose favouring stakeholders.

In a commentary the authors write: “Overall our findings support the view that the BRT statement did not represent a meaningful commitment and was not planned or expected to bring about meaningful improvements in the treatment of stakeholders.”

The “main impact” they say may be to “insulate” corporate leaders from shareholders and to head off potential action from politicians and regulators.

And there is a grim conclusion. “Reliance on the discretion of corporate leaders to serve stakeholders, as supporters of stakeholder governance advocate, would be an ineffective and counterproductive approach to the protection of stakeholders.”

Company documents

When Bebchuk and Tallarita looked at the companies of Roundtable board members at the time of the statement, 68% made no mention of stakeholders in documents at the end of 2020. At JPMorgan Chase, whose chief executive Jamie Dimon was chair of the Roundtable at the time of the statement, company guidelines say: “The Board as a whole is responsible for the oversight of management on behalf of the Firm’s shareholders.”

The researchers also examined documents at 25 “large” company members of the Roundtable that signed up to the statement. A total of 84% made no mention of stakeholders in their documents and 73% “explicitly embraced shareholder primacy”. Of 86 further members of the Roundtable, 76% ignored stakeholders in company statements of purpose; 57% made explicit commitments to shareholders.

In fact, Bebchuk and Tallarita could find only two companies they could classify as “stakeholder” organisations, Cummins and International Paper. And for these companies, the 2019 declarations represented no change on previous commitments.

Overall the investigators made a number of observations about Roundtable members. Language in corporate guidelines generally did not improve the status of stakeholders, while most reflected a shareholder primacy. Following 40 shareholder proposals demanding implementation of the Roundtable statement, the companies involved refused to recognise any need for change.

Bebchuk and Tallarita conclude support for the 2019 statement was “mostly for show” and Roundtable members “did not intend or expect it to bring about any material change in how they treat stakeholders”.

That may leave some wondering what gains have been made despite widespread discussion of stakeholderism. Indeed, there appears to be reassessment under way looking at corporate commitments to stakeholderism, corporate purpose and sustainability. In the UK at least, some campaigners are demanding changes to the law to beef up boardroom responsibilities to a wider group of stakeholders.

The pandemic has increased pressure for corporates to regard stakeholders with the same importance as shareholders. As the full implications of the crisis continue to unravel, stakeholderism is bound to remain a key point of debate.