Jamie Dimon and dozens of other leaders at some of the world’s largest companies are abandoning the long-held view that shareholders’ interests should come first.
The purpose of a corporation is to serve all of its constituents, including employees, customers, investors and society at large, the Business Roundtable said Monday in a statement. Dimon, the chief executive officer of JPMorgan Chase & Co., heads the group.
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” the group said in the statement. “Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity.”
The 181 signatories include BlackRock Inc.’s Laurence Fink, Bank of New York Mellon Corp.’s Charlie Scharf and the CEOs of six of the biggest U.S. banks.
The shift in corporate priorities comes as widening income inequality and the rising costs of items including health care and higher education have led some politicians and others to question whether the fundamental premise of American capitalism should be revamped. Some executives also have complained that an outsize focus on share prices and quarterly results hamper their ability to build businesses for the long term.
The idea that businesses exist primarily to benefit shareholders -- also known as shareholder primacy -- took hold in corporate America in the 1980s. In 1997, the Business Roundtable embraced the idea in a document outlining governance principles.
The concept has been criticized for leading to a fixation on short-term results and helping fuel the rapid increase in executive compensation.
In his annual letter to shareholders this year, Fink urged chief executives to take a larger role in social and political issues rather than just focusing on profit.
“Stakeholders are pushing companies to wade into sensitive social and political issues -- especially as they see governments failing to do so effectively,” said Fink, whose firm oversees almost US$7 trillion in assets. The message echoed a position he took in 2018 urging CEOs to make a more positive contribution to society.