How do you define a business?

49 years ago, Economist Milton Friedman wrote in Time Magazine what became known as the ‘Friedman Doctrine” - That the social responsibility of a business is to maximise profit and its only responsibility was to its shareholders.

The Business Roundtable - which makes up the CEOs of America’s largest companies, has had a mission statement for 20 years that has said “The paramount duty of management and of boards of directors is to the corporation’s stockholders.”

Until this week.

181 top CEOs from companies including Apple, Amazon, Cisco, Coca-Cola, IBM, Salesforce, Home Depot, FedEx, Target, Johnson & Johnson, JP Morgan Chase, Goldman Sachs, KPMG, Deloitte, Ford, GM, Exxon Mobil and Walmart have just signed the Business Roundtable’s new “Statement on the Purpose of a Corporation.”

For the first time, America’s largest companies are recognising that a business isn’t there to just make profit and hit the next quarter’s result. The new statement says:

“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:

1 > Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.

2 > Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.

3 > Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.

4 > Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.

5 > Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

In this new definition, it’s a commitment to customers first. Then employees, partners, the community and then shareholders.

The word “profit” doesn’t even appear, and while value for shareholders is included, it’s the last on the list. And it’s specifically a commitment to long-term value.

Entrepreneurs and small business owners around the world - together with consumers and impact investors - have been moving towards social entrepreneurship and conscious capitalism for over a decade.

This week is a milestone, as the largest companies switch over and join us.

It’s about time!

“The purpose of life is a life of purpose.” - Robert Byrne

The statement -https://opportunity.businessroundtable.org/ourcommitment/