Working Together to Protect
Our Common Resources
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Welcome to the inaugural newsletter of The Shareholder Commons. We know you are busy and will try and be gentle with your inbox. Please spread the word by forwarding this newsletter to others who may be interested. If you feel inspired to get involved, please reach out to me
at rick@theshareholdercommons.com.
This Month’s Ramble: Did the Business Roundtable Just Solve Everything?
Just one business day after our launch, the Business Roundtable announced that it had created a new Statement on the
Purpose of a Corporation, which declares that stakeholders, including workers, customers and communities, are as essential to a corporation’s purpose as shareholders. Sounds like fantastic news—if companies from Amazon and American Airlines to Whirlpool and 3M are signing on to this new and improved corporate purpose, perhaps the concerns that The Shareholder Commons was created to address have been solved. Can we declare victory and go home?
Not quite. There has been lots of good discussion sparked by the news. Here are three good examples: Empty Rhetoric?, Don't Believe CEOs Until Their Actions Match Their Words and Don’t Shun Profits. The reaction ranges from “that sounds like PR puffery,” to “serving stakeholders will destroy American capitalism” to “I thought that is
what business already did.” Indeed, the Statement was susceptible to multiple (mis)understandings.
As the dust settled, the BRT issued an FAQ that was both clarifying and disappointing. The key was question six:
"How will you resolve matters if the best interests of any one stakeholder conflict with the best interests of shareholders?
While we acknowledge that different stakeholders may have competing interests in the short term, it is
important to recognize that the interests of all stakeholders are inseparable in the
long term."
In other words, “don’t worry, there are no conflicts between long-term share value and workers, the environment or society.” This sounds wonderful but the fact is, that isn’t how the real world works. Companies can make money by externalizing costs (like the high environmental cost of carbon) or taking advantage of asymmetric knowledge—remember VW? (And before you point out that VW’s conduct cost their shareholders dearly, remember that
getting caught was not part of their plan.) Indeed, this is why we have laws that apply to corporations—the profit motive does not inevitably lead to social good.
The tough question for capitalism is how to reconcile the value of markets and the profit motive for allocating resources against the risk that those tools can motivate behavior that threatens our collective future. That is what The Shareholder Commons is all about—using the power of investors and others to create a level but
sustainable playing field for companies to compete on.
But the Business Roundtable and its membership is still in denial about the difficult choices that have to be made, and we cannot solve the hard problems of capitalism until we acknowledge their existence.
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The Shareholder Commons News...Our Growing Following
Thanks to every one of our readers for making our “soft launch” a success. We are already over 100 subscribers, have had over 250 visitors to our nascent website, and have 30 followers on Twitter. Please help with those numbers!
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The word is also spreading through live events.
Last week, I was honored to address the American Bar Association’s Corporate Governance Committee and its Corporate Social Responsibility Committee at their annual meeting. We discussed the intersection of business law and our work to create more sustainable business behaviors. I was joined by Jeff Clements, the President of American Promise, who discussed
how the arms race in corporate political spending is making everyone worse off.
Over the next two months, we will be participating in more important policy events, including A New Deal for This New Century: Making Our Economy Work for All, the 2019 Berkeley Sustainable Business & Investment Forum, and the American Promise National Citizen Leadership Conference. The
Berkeley event will include a panel on our theory of change.
Please let us know if you are looking for speakers or panelists at events that would benefit from The Shareholder Commons' perspective.
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One of our immediate tasks is development of a platform of substantive requirements (see “Potential Guardrails” in this deck) that we believe that every large company should meet in order to
ensure that their profits do not come at the expense of critical social and environmental systems or as a result of exploiting vulnerable communities. We are organizing workshops for climate and political spending guardrails. If you are interested in participating in (or sponsoring) either of these workshops, please contact us.
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Be Careful When You Hear "Opportunity"
The Shareholder Commons needs some early supporters willing to serve on our advisory board and open a few doors and provide some financial support. To the extent any of the help comes from names that are recognizable by foundations, executives and investors, we will be able to build credibility and early momentum.
This is an opportunity for anyone who is frustrated with the lack of progress in the fight for real change in the way business is done—I left my job and pledged a minimum of one year of pro bono work to make this happen. Please pass this on to anyone in your circle that you think would be interested in helping us get serious
early traction.
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Up top, I called this “The Shareholder Commons' newsletter.” Can we do better than that? Please submit your entries for a name for this monthly newsletter. Prizes will be awarded (my book—what did you think?) for the name we actually use, as well as funniest submission, any reasonable palindrome and anything else the Prize Committee decides on.
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Alan Horowitz, Principal Advisor at TSC, who has spent 20 years in the sustainability trenches, reflects on the vision
necessary to get the work right. Ann Lipton asks why the U.S. disclosure system focuses on investors only—why not require large companies to provide information material to workers and citizens? James McRitchie wants to know why the SEC doesn’t help mutual fund investors understand how their shares are being voted. Lastly, what does it mean that the Trump administration is using antitrust enforcement to threaten carmakers working to improve auto emissions?
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Now, that wasn’t too painful, was it? If not, please forward this to friends and colleagues who might be interested, and if you have not already done so, subscribe, follow us on Twitter and just generally let us know you are out there.
Onward, friends.
And don’t forget to breathe.
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Please forward this email to anyone
who may be interested in getting involved,
or could assist us with moving our work forward.
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