Issues & Insights

CEOs’ Woke Joke: Surrendering To ‘Stakeholders’

I&I Editorial

By now you’ve likely heard of the Business Roundtable’s recent pledge to focus on “stakeholders” rather than shareholders. It was widely hailed as the start of a new era in higher corporate consciousness. But is it?

No. In fact, it’s a sad sign of the times when a group of people with such great financial responsibility sign a “pledge” that commits them to doing the exact opposite of what they’re supposed to do, in the only economic system that has ever delivered wealth and happiness to hundreds of millions of people.

Let’s start with that term “stakeholders.” Sorry, but it’s a vacuous term, a weasel word that essentially means “anyone we want to please.” It shows even supposedly bottom-line-oriented CEOs are vulnerable to PC gibberish. Shareholders have skin in the game; a diffuse, ever-changing group of ill-defined stakeholders don’t.

The 189-member group of major-company CEOs — among them the top dogs at Amazon, Apple, JPMorgan Chase and Walmart — says it wants to “modernize” American corporations.

“Americans are struggling,” the pledge said. “Too often hard work is not rewarded, and not enough is being done for workers to adjust to the rapid pace of change in the economy.”

That all might be true, but the fact is, individual companies have the power to deal with that right now, without signing a PC “pledge” to do so.

Workers not rewarded? Raise their pay.

Rapid change leaving your workers behind? Offer them better training. But please, no moral sermons.

By both law and custom, it is a corporate leader’s fiduciary responsibility to look after his or her shareholders’ interests. To do otherwise is a breach of the faith investors show when they risk their hard-won savings. To tell them they’re no longer the company’s main concern goes beyond foolish — it’s a danger to our free-market system.

The 181 CEOs who signed the pledge make a categorical mistake when they believe that serving their shareholders doesn’t advance a higher societal function. It does.

Investors help companies grow. Their profits allow expanding companies to hire workers, create new goods and services (yes, even the Internet), and help build stable communities. Corporations and workers alike pay taxes, and fund charities. These are all beneficial to our country. Vague pledges from CEOs looking out for “stakeholders” is a dodge. Shareholders are harsh masters, it’s true; “stakeholders,” whoever they might be, really are not.

Of course, this kind of thing happens about every business cycle or so, when the stock market’s on a roll and CEOs start dreaming about not having their feet held to the fire over short-term profits. The idea that “short-term profit” is evil is dead wrong. Any true entrepreneur will tell you, the short term is the long term.

Sorry folks, but you shouldn’t change the system that has made America the wealthiest nation on Earth. It’s unacceptable for those whose personal worth runs to the billions of dollars, who won’t suffer their own folly, to proclaim they want to change it all.

Hopefully, they’ll get an earful from their shareholders who will tell them how foolish they are. The surest way to go broke fast is to focus not on shareholder value, but on nebulous social goals such as protecting “stakeholders.”

Furthermore, more than half of all Americans are shareholders. They own stock through 401(k)s, IRAs, mutual funds and a variety of other investment vehicles. They depend on companies focusing on profits to live.

These are the real stakeholders. They trust CEOs to maximize profits. Of course executives should follow all the laws and ethical codes of both government and business. But they must have shareholders’ interests in mind when they do so.

In fact, it’s the law. Any CEO who does not accept his or her fiduciary responsibility is technically a violator. Those CEOs who signed the pledge might not have realized it, but they don’t get to make this decision. The people do. CEOs who impose far-left ideas on their corporations deserve to be sued by their cheated shareholders.

As is often the case, Nobel-winning economist Milton Friedman said it best:

“There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

Or as Instapundit’s Glenn Reynolds has pithily summarized: “Get Woke, Go Broke.” We hope the CEOs are smart enough to heed that advice.

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The Issues and Insights Editorial Board has decades of experience in journalism, commentary and public policy.


  • A lot of companies that are coming out as “woke” seem to be losing customers and money. Dick’s and Gillette spring to mind. Companies and their CEOs are listening to the squeaky wheel instead of the other three wheels that aren’t making any noise. Get “woke”, go broke.

    • Exactly right. Actually, Gillette is owned by Proctor & Gamble. We no longer buy any of their products. No company should attack or insult their customers. Shareholders should sell the stock of woke companies. It is going to drop. Maybe then those companies will listen to their owners, the shareholders.

      • Procter and Gamble. And,l yes, as a shareholder, this is highly offensive.

  • It will all work itself out in the wash once a few of these companies start to go belly up.

  • This was virtue signaling at its best. Again, who are these CEOs kowtowing to? The vocal minority on Twitter? The vapid talking heads on cable news?

    This statement will have as much profound effect as the Paris Accords. It allows signers to sing their praises, about “doing something” for the greater good. But in actuality, nothing will happen.

    As stated in this editorial, if they are truly concerned about “rewarding” workers then why doesn’t every CEO who signed this ridiculous statement immediately give all their employees 15% raises. Actions speak louder than words.

  • The Clinton Years saw the rise of an organization called Businesses for Social Responsibility , reflecting many of the values that the Business Roundtable now espouses. Among the founders were Ben & Jerry’s (sold to Unilever), The Body Shop (sold to L’Oreal) and Stride Rite (sold to Payless). No matter what the pledges involve, if it created value it would have endured.

    Over on NPR, Kai Ryssdal stated on his Marketplace show that ‘We may look back on this as the day that changed it all’ [paraphrased from memory; I couldn’t find a transcript]. Good luck with that, Kai. This might be the business equivalent of the Paris agreement: Lots of good intentions, but no measurable promises and no accountability. You guys let me know when you’ve saved capitalism, OK? I’ll be over here working.

  • I haven’t read, much less analyzed, the Pledge signed-off on by the CEOs, but in a Perfect World somthing like this would be fair and just :

    a) A flurry of SHAREholder derivative actions alleging breach of fiduciary responsibility;
    b) The corporations defend on the basis that the pledge is not contractually binding, that the pledge is only an aspirational statement, that it is good Public Relations in this “woke” era, and thus beneficial to the corporation and shareholders;
    c) A really extreme group of SJWs are incensed and demand that the corporation do whatever is demanded or face demonstrations, boycotts, etc.; and
    d) The CEO and Board then have to decide how aspirational and “woke” they really want to be.

    As I noted, I haven’t even read or studied the Pledge, and since this is not a Perfect World, I fear the defensive aspirational assumptions I have noted above will be so clear and obvious that serious securities litigators
    will be hesitant to sign on.

  • Gillette got “Woke” by an Indian corporate marketing exec who thought it was the job of this division of P&G to chastise men, their primary customer, with”toxic” male lectures. P&G jus took an 8 billion dollar write down in that division. So much for customers caring about a corporations “woke” agenda.

    I mention the fact that the guy who signed off on this stupid idea wasn’t an American but instead one of the growing number of marketing and management candidates who were born, raised, and groomed for these U.S. positions in countries like India due to the lack of American candidates from American universities who teach feel good liberal garbage instead of actual criteria that would fulfill their educational mission. He, as reported, had only been in the U.S. for less than 10 years. Might have great educational credentials but was oblivious to who were his customers.

    However these foreign imports have no clue about America as a complete country and are easily swayed by the left/liberal/Democrat agendas. Result? Major loss for a public company and their shareholders.

    Advice? Stick to your sales efforts and leave the PC and other agendas to politicians. Your shareholders didn’t sink their money into your stock so you can use it to insult them with your off the wall advertising.

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