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Business Roundtable's New "Purpose" Brings Gushing, Grumbling, Grousing -- And Globalization

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I've detected at least three lines of thought in response to the Business Roundtable's decision to update its "Statement on the Purpose of a Corporation."

There's gushing. There's grumbling. There's grousing.

I would like to add a fourth G: Globalization.

The Business Roundtable, an association of the United States largest companies, announced Monday it had dusted off this Milton Friedman-inspired document, the cornerstone of which was that by putting shareholders first, companies would do just fine. Shareholders would reward vision, sound decisions and proper execution -- and punish lapses in a direct manner: financially, through the stock market.

On Monday, the association announced to much fanfare that 181 of its 189 members signed off on a change to the document, which now says companies should operate "for the benefit of all stakeholders -- customers, employees, suppliers, communities and shareholders."

Some were elated.

It's about time, they said. Large multinationals should pay attention to the impact they have on their employees, on the environment, on their customers' health and the world at large! (By which they mean the negative impacts.)

Some were deflated.

They viewed it as nothing more than a sop to the elated crowed. True leaders understand, they reason, that if you aren't watching out for your customers and your employees, you can't really be watching out for your shareholders. It's semantics, little else.

Some were cynical.

They sense a backlash to their compensation packages and other issues, this line of reasoning goes, and this is simply an effort to tamp that down a bit in this election season.

My guess is you see some truth in at least one of those and perhaps even all three.

A lot has changed since the original statement of purpose was put into place.

Today, most of these companies are multinationals. Current members include 3M, Accenture, Alcoa, Amazon, American Airlines, American Express, Apple, AT&T, Bank of America, Bayer Corp., Best Buy, Boeing, Bristol-Myers Squibb -- you get the idea and I am only up to the letter B.

Many of these largely multinational companies do business and have customers in China, in the Middle East, in South America, in Africa.

Places where there are human rights violations. Religious persecution. Environmental issues. Corruption at the highest level.

Is there a subtle message here in this new statement of purpose, that the corporation has a responsibility beyond our borders?

Forget the motivation for a moment, could this be an expression of desire by the Business Roundtable to suggest that companies have a role to play in diluting or reversing the perceived bad behavior of foreign governments, other actors or even their own in the world's hot spots?

While the new statement does clearly say the revision is for "the future success of our companies, our communities and our country" -- and not the world -- increasingly these companies generate a majority of their revenues outside of the United States. Does their responsibility, as expressed in the new document, stop at the U.S. border? That's a tough sell.

While they might not be tested immediately, there will be opportunities for these multinationals to jump into the fray oh-so-very often. Such is the nature of life on the planet Earth.

Think Hong Kong. Think Venezuela. Think the Northern Ireland-Ireland border issue. Think the Amazon rain forest. Think Iran. Think obesity. Think lung cancer.

Much has changed since 1970, when Milton Friedman wrote his essay in the New York Times, "The Social Responsibility of Business Is to Increase Its Profits."

While it's a reasonable argument whether the world is more or less dangerous today, what is inescapable is that the modern U.S. corporation is far more engaged globally than ever before. With that engagement comes an inescapable responsibility.

Place that responsibility where you like -- to the shareholder or to customers, suppliers, employees, the community, shareholders and the country -- it doesn't go away.

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