Business Roundtable Statement Put to the Test
This special bonus episode of the podcast is a follow up to another bonus episode from two weeks ago, a critical review of the hype surrounding the Statement on the Purpose of a Corporation from the Business Roundtable.
A week and a half ago, the Business Roundtable issued a press release declaring that, though profit could still be the primary and dominant goal of corporate management, there now might be other goals as well. The statement was widely mischaracterized as a bold reform that placed pro-social purpose before profit. Business writers who never actually read the statement rushed to declare that it was a bold first step in business reform. A few more hesitant voices acknowledged that the Business Roundtable statement didn’t create any actual mechanism for change, and that its worth should be judged by the actions of the corporations who belong to the Business Roundtable.
Today, we are presented with a moral test of the worth of the Business Roundtable’s supposed change of heart. This week, The Intercept reported that Blackstone, a gigantic investment firm whose CEO, Stephen Schwarzman, belongs to Business Roundtable, is the majority owner of a business that makes its money by helping people to burn the Amazon rainforest.
Blackstone owns 60 percent of Hidrovias do Brasil, a company that runs a terminal on a river deep in the Amazon rainforest. This terminal profits by helping businesses to ship the commodities they have taken from lands that have been cleared by burning the Amazon down.
Confronted with its role in burning the Amazon, Blackstone had the chutzpah to claim that it was reducing carbon emissions by making the process of shipping commodities out of the ruined rainforest more efficient. Blackstone bragged that it was being environmentally responsible when it “allowed the more efficient flow” of goods produced by lighting the Amazon rainforest on fire.
In the Business Roundtable Statement on the Purpose of a Corporation, the organization’s CEO members promised that they would be, “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.”
Today, we are at a moment of truth. Did the CEOs of the Business Roundtable really mean it when they made this promise, or was it just another example of purpose washing, the use of noble sounding language to describe ruthlessly abusive business practices?
Enthusiasts for the Statement on the Purpose of a Corporation have argued that, with the Statement’s release, Business Roundtable CEOs will no longer be able to get away with abuses in the pursuit of profit. They have claimed the Statement will force members of the Business Roundtable to pressure each other to behave responsibly.
Today’s revelations of Blackstone’s rapacious participation in the destruction of the Amazon rainforest tests that hypothesis. If the CEOs of the Business Roundtable team up to force Blackstone to divest from Hidrovias do Brasil, then we will know that the Statement on the Purpose of a Corporation was a genuine step forward in business reform. If they fail to do so, the Statement will be revealed as a sham.
Talk is cheap. The time for purpose statements and PowerPoint presentations at conferences is over. Business needs to follow words with action.
Commercial corporations have been profiting from the devastation of our planet and its human inhabitants for too long. If their leaders truly care, they need to prove it by taking strong action to end corporate abuses now.
Anything less will prove that no large business can ever be trusted to behave humanely on its own, that the goal of human business is an unrealistic pipe dream, and that the only way that the destructive greed of commercial corporations can ever be meaningfully confronted is through strong government regulation.
