As some of you may know, the Business Roundtable CEOs issued a new pledge, “Statement on the Purpose of a Corporation,” which redefines how we think about stakeholder value to include more than just maximizing profits for shareholders, but also includes customers, employees, and communities. Nearly 200 Business Roundtable CEOs signed the statement, lending their support to this new view of a corporation’s role.
Kaiser Permanente is a proud member of the Business Roundtable and I wholeheartedly support this pledge. Questions have been raised as to why I didn’t sign this pledge, and the answer is because we are a not-for-profit organization and do not have shareholders.
I was deeply engaged with my Business Roundtable CEO colleagues around this work and energized by the thoughtful conversations. I believe our unique perspectives were helpful in the deliberations.
We do not have shareholders and our model does not incent maximizing profits. We produce operating income to improve quality, service, access, and the affordability of health care and coverage by investing in buildings, technology, and people, while also investing in programs to help improve the health of the communities we serve. This important distinction also positions us to help corporate America realize the redefined purpose of its existence.
One other point I want to make: While we do not have shareholders, we are accountable to the government and our communities to demonstrate our continued worthiness of being a tax-exempt, nonprofit organization. I appreciate the work you do every day to make this accountability a reality.
Some people may be skeptical of the pledge statement of purpose, but I truly believe that this is a serious shift, driven by the societal forces that exist right now. Everything based in this pledge is redefining our everyday lives and, also redefining how companies think about themselves.
I am so pleased that corporate America is moving from maximizing shareholder value at any cost to agreeing that companies have a bigger purpose. This is a major step forward in corporate America.