Purpose – It Was the Buzzword of 2019 for The Corporate Sector & Investment Community. The Debate Will Continue i n 2020




Purpose – It Was the Buzzword of 2019 for The Corporate Sector & Investment Community. The Debate Will Continue in 2020

The year 2019 began with an important challenge to corporate leaders from Larry Fink, chairman and CEO of the world’s largest asset manager, BlackRock (with more than US$6 trillion in AUM).  He writes each year to the CEOs of companies that his firm invests in on behalf of the firm’s clients. There are literally hundreds of publicly-traded companies in the BlackRock portfolio.

At the start of 2018, CEO Fink wrote that every company needs a framework to navigate difficult landscapes and it must begin with a clear embodiment of the company’s purpose (in the business model and corporate strategy). “Purpose being not a mere tagline or marketing campaign; it is a reason for the company’s being – what is does every day to create value for its stakeholders.”

Purpose, Larry Fink explained in his January 2019 letter to CEOs as he expanded on the theme, is not the sole pursuit of profits but the animating force for achieving them.  And, profits are in no way inconsistent with purpose; in fact, profits and purpose are inextricably linked.

The 2019 communication to CEOs pointed out that the world needs their leadership (especially) in a polarized environment. Stakeholders are pushing companies to tackle social and political issues as governments fail short of doing that. And Millennials (now outnumbering the Baby Boomers in the workforce) represent a new generation’s focus – on various expressions and demonstrations of corporate purpose.

The 2019 letter created a buzz in the corporate sector and in the capital markets as people weighed in on all sides of the issue.  What many agreed with was that there were now clear signals that the half-century doctrine for the corporate sector of “shareholder primacy” was giving way to “stakeholder primacy.”

As the purpose discussion rolled on, in August 2019 the influential Business Roundtable issued a revision of its Statement on the Purpose of a Corporation, signed by 181 of the CEOs of the largest of American companies (firms both publicly-traded and privately-owned). 
The CEOs committed to lead their companies for the benefit of all stakeholders: customers, employees, suppliers, communities, and shareholders.

The Roundtable’s Principles of Corporate Governance has been issued since 1978; from 1997 on this endorsed the principle of shareholder primacy (that corporations existing principally to serve shareholders).  The new statement, said the BRT in summer 2019, outlines a modern standard for corporate responsibility. 

The team at G&A Institute looked at the companies whose CEOs are members of the Business Roundtable (almost 200 in all), examining their public disclosures and structured reporting on “walking-the-talk” of “purpose” and “responsibility to stakeholders”  Our approach was to analyze the means of reporting “on corporate purpose” and the focus on any related content of sustainability / responsibility / ESG / corporate citizenship reporting by the BRT member companies.  (The good news:  there’s plenty of relevant information on purpose in the leadership corporate reporting.)

The analysis is available on the G&A Institute web site – see this week’s Top.  There are relevant links in the analysis as well.

What will the purpose of the corporation discussion be in the new year, 2020?  Stay tuned to the perspectives shared that we’ll have in this newsletter and on our blog, Sustainability Update

Best wishes to you for the holiday season from all of us at G&A!

BlackRock CEO Larry Fink’s 2019 letter: https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter

 

Top Stories

G&A Institute Releases Analysis of The Business Roundtable Companies’ ESG Reporting Practices
Source: Governance & Accountability Institute 
Governance & Accountability Institute’s research team examined the ESG / sustainability reporting practices of the BRT signatory corporations to examine trends and create a baseline for tracking progress and actions going  forward.  Today, G&A released these initial benchmark results in a resource paper available on our website.

More on the Corporate Leadership Theme…

How to Make Sustainability More Than a Buzzword
Source: Entrepreneur 

Board Action on ESG Needed to Ensure Long-Term Performance Gains
Source: Forbes 

ESG Notebook: 6 Practical Approaches To Increasing Corporate Sustainability
Source: Forbes 

Coca-Cola CEO: Wall Street plays catch-up rewarding firms for socially responsible investments
Source: CNBC 

 

 

G&A Institute Sustainability Update
Informative, insightful, thought provoking
Governance & Accountability Institute's blog focusing on the sustainable world evolving daily before our eyes. Read it, absorb it, question it and challenge.

Sustainable Investing Has Moved Into the Mainstream — and UBS Survey Results Send Strong Signals This is a Lasting Trend

The World Economic Forum on Corporate Citizenship Topics – With Focus on the Fourth Industrial Revolution

 

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G&A RESEARCH

FLASH REPORT: 60% of Russell 1000® Are Publishing Sustainability Reports, G&A Institute’s 2018 Inaugural Benchmark Study Shows

FLASH REPORT: 86% of S&P 500 Index® Companies Publish Sustainability / Responsibility Reports in 2018

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Sustainability Standards Setters & Policy Makers

Certifying Sustainability
Source: Industry Week 

How to Decipher “Sustainable Fashion” in 2020
Source: Harpers Bazaar 

Asking Questions About Sustainability, Scale, and Systems Change
Source: Stanford Social Innovation Review 

Top 50 US Cities Ranked by Progress of Urban Sustainability
Source: Commercial Cafe 


ESG / Sustainable & Responsible Investment

A Decade for Sustainable Investors to Prove Economic and Sustainability Returns
Source: Forbes 

Nasdaq Sustainable Bond Network Builds a Framework for a Sustainable Future
Source: NASDAQ 

Finally A Way to Assure Sustainability and Impact: Vornado, Etsy and LeapFrog Lead the Way
Source: Forbes 

What is the difference between ESG investing and socially responsible investing?
Source: SP Global 

EU bank approves €8.1 billion for renewables, climate action, sustainability
Source: Smart[Energy 

10 Sustainable Investing Stories of 2019
Source: MorningStar 


Corporate Sustainability / ESG

Sustainability – a valuable opportunity for the pharmaceutical industry
Source: Pharmaphorum 

Nestlé releases ‘Tackling Child Labor’ report as it pushes for 100% sustainable cocoa by 2025
Source: Confectionery News 

 

Global Sustainability News: Forward Momentum!

Water Management Crucial for Sustainable Agriculture
Source: Industry Global News 

A sustainable new material for carbon dioxide capture
Source: PHYS.org 

Green Chemistry: The Secret Behind Sustainable Product Development
Source: Triple Pundit 

Business aviation has a good story to tell when it comes to sustainability
Source: EURACTIV 

2019 Was the Year Sustainability Finally Burst into The Fashion Mainstream
Source: Fashionista 

10 dynamo sustainable packaging revelations of 2019
Source: Packaging Digest 


Sustainability Matters!

6 inexpensive things cities can do to become more sustainable 
Source: GreenBiz 

Chile/Madrid Climate Change Conference
Source: IISD 

Starting Simple with Sustainability
Source: Industry Week 

Sustainability Data That Matter

Is It Possible to Have 100% Sustainable Energy Data Centres Through Wind and Solar Power Alone?
Source: Data Economy 

From Grey to Green: Embedding Sustainability and Ethical Practices into Data Centres
Source: Data Economy 

 

The Sustainability Highlights eNewsletter is prepared by Governance & Accountability Institute, Inc. based on continuous monitoring of trends and developments in Sustainability and ESG. Copyrights for other providers are noted where appropriate. Please credit the source if quoted. Content © 2009 - 2019 - All Rights Reserved.

Governance & Accountability Instiute is the "Sustainability Headquarters™" for clients in the corporate, investment, public and social sectors. Based in New York, G&A is a for-profit consulting organization providing a range of value-added strategies, services and resources related to ESG & sustainability to clients in the corporate and capital markets communities. For G&A's full range of services, click on each of the links: Sustainability / ESG Consulting Services, Communications & Recognition Services, Investor Relation Services. For more information, visit www.ga-institute.com or contact us at 646.430.8230 or info@ga-institute.com.