Salesforce (NYSE:CRM) CEO Marc Benioff recently declared that capitalism is dead, suggesting that America “[Needs] a new, more sustainable, more equitable, more fair capitalism.”
Benioff’s company is one of 193 American businesses that have signed the Business Roundtable’s Statement on the Purpose of a Corporation that highlight’s the need for companies to address all the stakeholders of a business and not just the people who own the stock.
“As a CEO, as a company, you cannot wash your hands of how society uses your products. You cannot wash your hands of your responsibility to society. You cannot wash your hands of your responsibility to the public schools or to the homeless or to whoever,” Benioff said. “I believe that business is the greatest platform for change.”
No longer is shareholder primacy the key principle of the Business Roundtable. The group’s current chairman is Jamie Dimon, CEO of JPMorgan Chase (NYSE:JPM). The fact that Dimon’s jumped aboard this movement suggests investors of all types better pay more attention to the changing of the guard.
“Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans,” Dimon stated.
Who are the CEOs that are walking the talk? Here are 10 to get you started.
Dan Amos, Aflac (AFL)
Most Americans know Aflac (NYSE:AFL) for the noisy duck that appears in all of its TV commercials. The supplemental insurance company prides itself on running a business that thinks beyond the almighty buck. It believes in the power of purpose. A quick peruse of its 2018 Corporate Social Responsibility Report mentions the word “stakeholder” no less than 11 times over 92 pages.
“With unprecedented access to immediate information, consumers, investors and stakeholders are finely tuned not only to what a company produces but also to who it is and the ideals for which it stands. They base their purchasing or investing decisions, at least in part, on these factors,” CEO Dan Amos stated in his opening message from its 2018 report.
Aflac tries to stay ahead of the times. Since 2008, it has held non-binding votes on its executives’ pay and was the first publicly-traded U.S. company to do so.
Its stock is up 70% since the beginning of 2008, which includes the stock market crash that year.
Keith Block, Salesforce (CRM)
Although Keith Block represents Salesforce on the Business Roundtable, I don’t think the co-CEO would be offended if I included Marc Benioff, founder of the company, in the discussion about Salesforce’s commitment to all stakeholders.
The company produces a yearly Stakeholder Impact Report. In 2019, it reported on a lot of interesting initiatives including working to get Proposition C passed by San Francisco City Council, a tax that will help marshall the resources necessary to tackle the city’s homeless problem.
“At Salesforce we believe that business is a powerful and trusted platform to drive positive social and environmental impact for all stakeholders,” Benioff and Block stated in the company’s intro. “We began as a different kind of company, focused on integrating philanthropy into our DNA with the 1-1-1 model. In 2014 we evolved that model through Pledge 1% and have since seen the impact a shared integrated philanthropy model can have on our world, regardless of company size.”
It’s easy to be cynical about a billionaire CEO doing good but if there’s anyone who deserves to be listened to, it’s Salesforce’s two co-CEOs.
Larry Fink, BlackRock (BLK)
If there’s a stakeholder lightning rod, BlackRock (NYSE:BLK) CEO Larry Fink would have to be it.
Each year, Fink writes a letter to the CEOs of companies that the world’s largest asset manager invests on behalf of its clients. Never dull, Fink often takes CEOs out to the woodshed in a dressing down that is off-putting to those not used to being held accountable for their misdeeds on behalf of shareholders.
Reports emerged that business people were less than happy about Fink using his platform as CEO of a $7-trillion asset manager to browbeat other CEOs for failing to meet the needs of all stakeholders.
“This is fundamentally not the role of a public company, and it’s unfair to investors who may not agree with his politics. A CEO shouldn’t use house money to further a goal that may not create economic returns,” stated Charles Elson, a corporate governance expert at the University of Delaware.
Well, as Harvard Business Review contributor Mark Kramer wrote in January, “Business leaders must finally, once and for all, let go of the outdated and erroneous notion that social factors — and not just diversity — are irrelevant to the economic success of our companies.”
As far as I’m concerned, as long as Larry Fink is CEO of BlackRock, I’ll be a big supporter of BlackRock’s products, including iShares ETFs.
Jamie Dimon, JPMorgan (JPM)
It seems you can get better with age. Not too long ago, I was convinced that the JPMorgan CEO was the Antichrist of banking, committed to enriching himself at the expense of everyone else. Here’s what I said about Dimon back in 2011:
“The recent tirade by JPMorgan CEO Jamie Dimon at the expense of Bank of Canada Governor Mark Carney underscores the reasons why you might want to reconsider your investment in America’s second-largest bank. Dimon’s ego is starting to run amok, and shareholders eventually will pay for his angry outbursts,” I stated on Oct. 5, 2011. Since those comments, Dimon has pulled in at least $30 million a year in compensation and owns $1.25 billion in company stock.
However, having served a two-year term as chairman of the Business Roundtable at a time when the powerful group of CEOs changed its view of the world, Dimon appears to have mellowed slightly.
He’s still big on keeping regulations to a minimum, but he definitely sees the need for CEOs to jump in and contribute to making the world better, a philosophy he didn’t seem to embrace as recently as five years ago. JPMorgan’s a much better bank as a result.
Tim Cook, Apple (AAPL)
It’s not a surprise that Apple (NASDAQ:AAPL) is one of the 193 members who signed the Business Roundtable’s pledge for CEOs and their companies to do better for all stakeholders.
A recent article from Forbes contributor Chuck Jones does a great job outlining the reasons Tim Cook doesn’t get the credit he deserves. I’ve always been a fan of Cook’s, despite his pay package, so it’s nice to see that others see all the good things the CEO has done since taking the top job in August 2011.
One of the biggest things Cook did when he took the reigns from Steve Jobs was to hire Lisa Jackson as the company’s vice president of Environment, Policy and Social Initiatives. Jackson had just served a four-year stint as the head of the Environmental Protection Agency and was ready for a new challenge.
Just like that, Apple became a company concerned about social responsibility, which some felt would be bad for business. Cook rightly told the naysayers they were welcome to sell their stock if they had a problem with the direction of the company.
Good CEOs know which battles to fight. Cook picked a good one that should help the company’s stock continue to climb in the next few years.
James Quincey, Coca-Cola (KO)
Search the word “stakeholder” in Coca-Cola’s (NYSE:KO) 2018 Business & Sustainability Report and you get 42 hits in 69 pages.
Since taking over as CEO in 2016, James Quincey moved quickly to change the company’s mindset and it’s paid off handsomely for shareholders, who’ve seen KO stock increase by 18% over the past year, much better than its typical return over the same period.
The company has gone from selling customers what it thought they wanted to give them what they actually wanted to put in their fridges. That has been good for sales, profits, and overall company morale.
“Focusing on the highest-priority environmental, social and governance issues for our business and our stakeholders is a foundational step in how we conduct business and develop our corporate strategy,” Coke stated in its 2018 report.
When it comes to polluting, Coke’s got a long way to go, but at least the CEO understands it can’t do nearly as well if the environmentalists are constantly on the warpath. It can and will do better.
Doug McMillon, Walmart (WMT)
Starting Jan. 1, 2020, Walmart (NYSE:WMT) CEO Doug McMillon will succeed Jamie Dimon as chairman of the Business Roundtable. McMillion will serve until the end of 2021.
“Doug is a superb leader of a company that reaches over 5,300 communities and employs 1.5 million people in America,” said Joshua Bolten, President & CEO of Business Roundtable, announcing McMillon’s appointment. “As CEO of the nation’s largest employer, Doug brings an important perspective to the policy debate around the future of work, innovation and America’s competitiveness.”
If America doesn’t figure out how to help the bottom 50% of the income ladder do better, Walmart’s target customer isn’t going to have nearly enough disposable income to keep its same-store sales and online revenues growing.
When it comes to stakeholder engagement, Walmart ought to be most concerned about two things: Paying its employees a real living wage and ensuring that the rest of American companies are doing the same. If it does that shareholders will do just fine.
Larry Merlo, CVS Health (CVS)
In September, CVS Health (NYSE:CVS) CEO Larry Merlo discussed in CNN Business what his company learned from removing tobacco from all its stores in September 2014.
“Without question, going tobacco-free was a bold, purpose-led action that significantly impacted our bottom line, but it was the right decision for our brand, our business and the health of the country,” Merlo commented.
Abandoning shareholder primacy for a more holistic approach to stakeholder engagement has taken the company in an exciting direction (health and wellness provider) that it couldn’t have done if it were still selling tobacco. As a result, it made up the losses and then some by transitioning the business to a more positive and useful pursuit of making America healthier.
That’s quite a change from selling anything that will make a buck.
“The research is clear: Companies that make decisions not simply for profit, but for the good of their customers and society, can make a significant impact,” Merlo argues. “Our experience making purpose-driven decisions also had an impact on our company, and showed that we could turn social advocacy into a competitive advantage.”
Merlo remains one of the good guys when it comes to CEOs running America’s largest companies.
Kevin Johnson, Starbucks (SBUX)
If there’s a company that was early to stakeholder engagement, it would have to be Starbucks (NASDAQ:SBUX), who’ve been concerned about making a social impact as a company ever since it went public in 1992.
“We have always believed Starbucks can – and should – have a positive social impact on the communities we serve. One person, one cup and one neighborhood at a time,” the company’s website states.
Whether it’s lending money to the farmers that grow its coffee, opening greener stores, serving the communities in which it does business, or creating employment opportunities for veterans, youth, and refugees, Starbucks has always been about doing what it takes to make all its stakeholders are proud of the company.
“Our reason for being a company goes far beyond the pursuit of profit. We were one of the first to offer healthcare benefits to part-time workers of 20 hours a week or more. We give anyone works at Starbucks equity in the company. We call them partners. We listen to our partners on what we can do to invest in them. We focus on what we can do to create opportunity,” CEO Kevin Johnson stated in a September interview with the Harvard Business Review.
Starbucks remains one of the few companies that understands the balance between purpose and profit which is at the heart of stakeholder engagement.
Lawson Whiting, Brown-Forman (BF.B)
Brown-Forman (NYSE:BF.B) remains one of the best American family-controlled businesses I know. In 2017, I suggested the maker of Jack Daniels should acquire Davide Campari-Milano (OTCMKTS:DVDCF), the Italian drinks company whose brands include Appleton Estate Rum and Skyy Vodka.
As a sixth-generation company, Brown-Forman has always been interested in corporate responsibility. The best interests of investors, employees, consumers, partners, and communities are all intertwined with no group more important than another.
An example of this dedication is DendriFund, an independent foundation that was created by the company and the controlling Brown family in 2012. DendriFund was established to improve the natural, social, and economic environment for generations to come.
Naturally, being a whiskey company, it focuses on maintaining the forest ecosystem, creating clean water, and growing healthy grains, the three things necessary for making its products. Any family-controlled business that can survive six generations as a public company must be doing something right.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.