ClientSmart interviewed Morrison & Foerster's Suz Mac Cormac, chair of the firm's Social Enterprise and Impact Investing and Energy practices, about the Business Roundtable's adoption of a new "Statement on the Purpose of a Corporation."
The statement changes the definition of the purpose of a corporation to include not just shareholders but also stakeholders: customers, employees, suppliers, communities, and the environment. "I think there are three principal factors that [prompted the Roundtable's action]," Suz said, noting that these include "the growing realization by CEOs and boards of directors...of the tie between environmental, social, and governance factors (ESG) and shareholder value," as well as shareholder pressure and employee activism. "I think the CEOs and the Roundtable felt pressure to make a statement that would signal they are paying attention to these various voices."
Suz says that there is "definitely a significant move" in the direction of C corps adopting a Statement of Purpose, and she said she would advise clients to do so. "But even more importantly, I would advise my clients to pay close attention to ESG factors that may impact their companies' bottom line in the long run. Why? Because your employees care, because your customers care, and because your shareholders care, and not caring will affect your earnings."