Wednesday marks the first anniversary of the Business Roundtable‚Äôs vocal renunciation of ‚Äúshareholder primacy‚ÄĚ in a statement that claimed to ‚Äúredefine the purpose of a corporation.‚ÄĚ Like most efforts at ‚Äúcorporate social responsibility,‚ÄĚ the initiative has proved long on public relations, short on action, and lacking in effect. Among the 181 CEOs who signed, Harvard Law School‚Äôs Lucian Bebchuk and Roberto Tallarita have found only one whose board of directors gave approval. On the organization‚Äôs own website, the most recent ‚ÄúPrinciples of Corporate Governance‚ÄĚ still dates from 2016.

The Business Roundtable‚Äôs CEO members sought to ensure the public that they could be trusted as benevolent leaders of the economy, but instead they have demonstrated precisely the opposite ‚ÄĒ that multinational corporations are incapable of fulfilling obligations voluntarily to anyone besides shareholders, and external constraints are needed.

In fairness, the market‚Äôs competitive pressures discourage any one firm from hampering short-term profitability for the sake of corporate actual responsibility. But that is precisely where an institution like the Business Roundtable could play a valuable role, were it genuinely committed to addressing interests beyond those of the shareholders who control the firms themselves.

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Oren Cass
Oren Cass is the executive director at American Compass.
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