Financial Times: The Fight to Save Capitalism

Make no mistake, [Monday’s] ‘policy shift’ is nothing more than political pandering designed to further concentrate the power of the largest special interest groups, repair the damaged reputation of Wall Street firms, and silence the voice of America’s investors.

But now some executives are fighting back — and in an unexpected way. On Monday, the Business Roundtable released a statement endorsing a new corporate focus on stakeholders — not just shareholders. Strikingly, this was backed by 180 executives — and led by Jamie Dimon, chief executive of JPMorgan Chase (pictured above) and Alex Gorsky, chief executive of Johnson & Johnson.

Proponents of stakeholder-focused governance, such as Marty Lipton of Wachtell Lipton, hail this as a watershed. After all, the shareholder primacy creed has dominated Anglo Saxon finance for the past five decades and is embedded in many corporate and investment codes.

But what the BRT statement does is give “air cover” for company directors and investors who want to put more emphasis on issues such as the environment and inequality. That should make capitalism more acceptable to society at large; or so the hope goes. “This is a bulwark against populism . . . it is about making the corporate world more fair,” Mr Lipton told the FT.

If so, this will reflect a fascinating paradigm shift. But it may not be easy to convince sceptics that corporate America is really changing its stripes. After all, the BRT statement failed to mention some big issues that infuriate the political left, such as the sky-high level of executive pay or the paltry sums many companies pay in tax.

And some investment groups are furious too. “Make no mistake, [Monday’s] ‘policy shift’ is nothing more than political pandering designed to further concentrate the power of the largest special interest groups, repair the damaged reputation of Wall Street firms, and silence the voice of America’s investors,” said Chris Iacovella, chief executive of the American Securities Association, which represents regional financial services companies such as Ameriprise, Cowen and Raymond James. Or as the Council of Institutional Investors echoed: “Accountability to everyone means accountability to no one.”

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