ASBC calls Council of Institutional Investors “dangerously myopic”
Washington, DC – The American Sustainable Business Council (ASBC), representing the public policy interests of more than 250,000 responsible businesses, today denounced as “dangerously myopic” the response by the Council of Institutional Investors (CII) to calls for companies to consider all stakeholders, not just shareholders, in their drive for more profits.
“CII is flat-out wrong,” said Jeffrey Hollender, CEO of ASBC and founder of sustainable manufacturer Seventh Generation. “They’re way behind the curve when they say ‘societal objectives’ – the very goals that support our customers strengthen our country and protect our planet – have ‘limited or no connection to long-term shareholder value.’”
“Long-term shareholder value doesn’t come from fixating on next quarter’s returns or the fleeting high of automatic trades,” said Hollender. “And do they really believe that clean water has ‘limited or no connection to long-term shareholder value’ for a brewery, agricultural or tourism related companies? Or that paid sick leave has no long-term connection to shareholder value if it protects employees and avoids turnover and lost productivity? That’s a dangerously myopic view.”
Hollender’s comments came in rebuttal to CII’s response to the revamped view of the Business Roundtable, which Monday called on companies to expand their view of the purpose of the corporation to include more than simply shareholder value. While ASBC on Monday praised BRT’s new statement of corporate purpose, Hollender also noted that “words aren’t enough.
“Now it’s time for members of the Business Roundtable to put corporate action behind this statement, and ASBC and its members look forward to working with them to ‘walk their talk.’”
Leaders of ASBC association members also commented on the CII statement. Fran Teplitz, Executive Co-director of Green America, said, “CII expresses concern that stakeholder governance and sustainability may be ‘stalling needed change.’ The reality is that the refusal to meaningfully address the needs of diverse stakeholders, including a focus on social and environmental impacts, is causing widespread economic damage nationally and internationally.”
Michael Peck of 1worker1vote, wrote in a blog post, “Next steps must transform contemporary policy, politics and power paradigms to inspire, permit and sustain a truly ‘free marketplace’ equating stakeholders to shareholders. Prioritizing economic democracy, widespread, deepened and broadened stakeholder ownership unchains the equalizing possibilities of mission-driven, profit-seeking and innovating social enterprises.” The blog post may be found at http://1worker1vote.org/u-s-business-roundtable-born-again/
ASBC does agree with the CII’s apparent support for an appropriate role of government. The CII statement that says, “It is government, not companies, that should shoulder the responsibility of defining and addressing societal objectives…”
“Government has an essential, overarching duty here, and we’re glad to see CII embracing it,” said Hollender. “Over the past 40 years of anti-regulatory pressure, we’ve seen that good intentions by many businesses often fall short due to the actions of low road competitors. That’s why so many company leaders are urging government to take a more active, positive role in setting and enforcing regulations and crafting public policies. Only our elected government can create a level playing field and fair rules of play for all businesses.
“We’re the players, but government is the referee the market needs to deliver the goods. For a decade, ASBC has been making the business case for reasonable regulations that support responsible business practices,” Hollender added, noting that the theme of ASBC’s Summit this December is focused on these very issues: “Making Capitalism Work for All.”
“That’s not just a slogan,” said Hollender, “it’s a necessity; one we hope Institutional Investors will figure out soon.”