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In 2019, the Business Roundtable, an association of the most powerful CEOs in the US, won widespread praise by announcing its commitment to “stakeholder capitalism,” which delivers value not only to shareholders, but also to other affected actors, such as employees and communities. Now, however, the Business Roundtable has changed its tune: its April report, “The Need for Bold Proxy Process Reforms,” reads almost like a manifesto against stakeholder capitalism.
The reason for this volte-face is obvious. The Roundtable’s 2019 “commitment” was a clear attempt to get on the right side of popular sentiment: Engagement with social and environmental issues was up, and so were demands that powerful institutions get on board. But the political mood has changed. At a time when Americans are preoccupied with intensifying pressures on their own pocketbooks, the new second administration is actively rejecting environmental and social issues. For many CEOs, this looks like a golden opportunity.
So, the Business Roundtable is calling on the US Congress to “enact legislation precluding the inclusion of shareholder proposals relating to environmental, social and political issues in a company’s proxy statement.” With this, CEOs want to scrap one of the few formal mechanisms through which a diverse range of stakeholders can influence corporate behavior on issues such as climate risk, inequality, worker safety, and political transparency.
There is plenty of precedent for this. While the Business Roundtable’s CEOs like to pay lip service to voluntary corporate-responsibility initiatives, they have strenuously objected to public policies that would require them to follow through.
The fact is that delivering real value to workers and the environment would cost money, which would reduce shareholder dividends and executive pay — the real priorities of the Business Roundtable’s members. In fact, the compensation of CEOs who signed the stakeholder-capitalism “commitment” has continued to reflect their success in delivering shareholder value. 

The only way to rein in corporate power is to confront it head-on.

Christopher Marquis

As many critics warned from the start, the Business Roundtable never meant what it said in 2019. Whatever its claims about environmental or social responsibility, it has always been motivated by three interconnected objectives: avoiding accountability, maximizing short-term profits, and enriching executives.
To be sure, even from a commercial perspective, this approach is fundamentally flawed. A growing body of research shows that failure to account for social and environmental imperatives poses clear, material risks to firm operations and performance — not at some point in the distant future, but now.
But there is no reason to expect the Business Roundtable’s CEOs, or corporations more broadly, to change voluntarily. On the contrary, their April statement lays bare the transactional, opportunistic, and utterly dishonest nature of their moral posturing, which in reality, serves just one purpose: to get consumers and regulators off their backs. This should serve as a wake-up call to lawmakers, who have long cozied up to billionaires and large corporations, placing their hopes, against all evidence, in self-regulation.
The only way to rein in corporate power is to confront it head-on. That means mandating corporate commitments to structural change, imposing tougher punishments for corporate abuses, cracking down on dark money, strengthening antitrust enforcement, and expanding regulatory oversight, including of corporate influence over climate, labor, and economic policy.

• Christopher Marquis is Professor of Management at the University of Cambridge and the author of "The Profiteers: How Business Privatizes Profits and Socializes Costs" (PublicAffairs, 2024).
©Project Syndicate.