Let's not wait for Wall Street
In August, a collection of CEOs from some of the largest companies in the world signed a groundbreaking statement redefining the purpose of corporations. Their new mission: to do more than simply generate wealth for shareholders and, "build long-term value by investing in their employees and communities."
Led by executives like Jamie Diamond of JPMorgan Chase & Co., Mary Barra of General Motors and Doug McMillon of Wal-Mart, the Business Roundtable is calling for "an economy that serves all Americans," with practices that include fair employee compensation, work-place diversity and inclusion, and environmental protection among other commitments. The announcement left many tentatively applauding and others blinking their eyes in disbelief. Now that the PR buzz has died down, the question remains: what actions will these companies take to follow through on these promises?
For decades, communities across the country have seen first-hand the negative impacts of the reigning corporate philosophy that placed short-term profits above all else: rising income inequality, toxic air and water pollution, and an epidemic of opioid use. So, you can be forgiven if you're still skeptical about this newfound commitment to corporate responsibility.
The Business Roundtable statement is certainly a step in the right direction. However, if we are not careful, bold commitments like these have the potential to reinforce a culture of writing charitable checks while continuing with business-as-usual. Philanthropy plays an important role in creating economic opportunity, but if companies aren't committed to investing in systemic change in their community at the same time, no amount of giving will move the dial.
The consequences of disassociating the goals of a business from the needs of the surrounding community are apparent here in Oregon. Take the example of small business lending: in Portland, business loans under $100,000 have declined by almost $1billion. Only three SBA loans made in Oregon in 2017 went to black-owned businesses, and less than 20 percent went to women-owned businesses.
A recent tweet by Stephen Green, Chief Operating Officer at Pensole Footwear Design Academy, sums up the challenge:
"At an event where the three largest banks in Oregon gave $250K to an amazing charity that supports black youth...This is more money than they did in SBA loans to black businesses in the whole state of Oregon in the last year. Let that sink in."
As business leaders, it's time to re-evaluate our relationship with the broader community and recognize that our long-term financial success is intimately tied to the success of our employees, customers, neighbors, and environment. It's not enough to organize a volunteer event, contribute to individual entrepreneurs, or to make a tax-deductible charitable donation. Today, those are great places to start, but we have to go further and actively engage in the issues that our employees and communities face in their everyday lives.
When our business practices, policy advocacy and philanthropy align in support of the same goals, we can make real change. For those of us who run a business, that means looking at our hiring practices, at how we engage in our community and how we use our voices to support policies that affect all of us. It requires integrating and amplifying our approach to philanthropy. If your business makes a gift of bicycles to disadvantaged youth, are you pairing that with advocacy for programs like Safe Routes to School? If you donate to pediatric hospitals, are you calling for regulatory policies that reduce air pollution near schools? If you contribute to mentoring programs for youth, are you also supporting funding for public schools? If you invest in underrepresented founders, are you also advocating for systemic change with partners like Prosper Portland and Business Oregon?
Words are important — they set intentions and provide an opportunity for accountability. Time will tell how much change will come from the words of the 181 corporations that form the Business Roundtable. In the meantime, let's leave the grand statements to Wall Street. As businesses, we don't exist in a separate universe, walled off from social challenges and the experiences of our neighbors. Our organizations impact our communities regardless of our intent. So, let's act with purpose as we make decisions about how we operate and what we stand for. If we are committed to planning for the long term, it's the only viable path.
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