Business Roundtable Signers Not Delivering On ‘Statement of the Purpose of a Corporation’ : Study

Business Roundtable Signers Not Delivering On ‘Statement of the Purpose of a Corporation’ : Study

Test of Corporate Purpose Unveils How More than 800 Publicly-Traded Companies Responded to COVID-19 Pandemic and Social and Racial Injustice 

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Study analyzes domestic and international companies’ historic commitment to social good, speed in their response, and calls for new form of stakeholder capitalism

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New York, NY — Today, the Test of Corporate Purpose (TCP) unveiled whether companies are ‘walking the talk’ when it comes to meeting stakeholder, worker, and community needs during the COVID-19 pandemic, noxious inequality, and calls for racial and social justice. The report analyzed the S&P 500 constituents, Business Roundtable signatories, and hundreds of large European companies on three tests: commitment to purpose, historical performance, and speed of response. Access the full report here.

“We’re in a moment of both reckoning and renewal,” said Mark Tulay, Founder and CEO, TCP and CEO, Sustainability Risk Advisors. “Companies have an unprecedented opportunity to decide on which side of history they will be remembered. Our study reveals that lofty statements from CEOs amount to little when put to the test.”

Key Takeaways From The Test Of Corporate Purpose

The top-five takeaways were:

  • BRT Signatories ‘Purpose-Washing’ Unmasked. BRT Signatories did not outperform the ‘Test of Corporate Purpose’ on COVID-19 and inequality as compared to their S&P 500 or European company counterparts.
  • Powered by Purpose. Companies with 3-year track records of strong performance outperformed more than expected, while laggards’ underperformance became more pronounced, demonstrating how resilient companies became even more fortified during this corporate purpose stress test.
  • Speed matters. Proactive, substantive responses to the pandemic and inequality crises had a discernible positive impact.  Slow responders underperformed.
  • Global challenges and opportunities, not a US-only imperative. US and European companies performed roughly the same.
  • Shareholder capitalism seems no longer fit for purpose. TCP highlights the business case for ushering in a new form of stakeholder-aligned capitalism.

“The Test of Corporate Purpose brings important additional data to bear on the conversation about stakeholder capitalism,” said Margot Brandenburg, Senior Program Officer, Mission Investments, Ford Foundation. “It also highlights critical gaps in our understanding and points toward the work that lies ahead if companies are to fulfill their promise to all of their stakeholders. TCP is a moment in time snapshot, but it attempts to capture company behavior at arguably the most critical moment we’ve lived through in decades.”

BRT Signatories Need To Start With A Statement of Purpose

“With this study, empirical evidence continues to accumulate that the companies who signed the Business Roundtable’s ‘Statement of the Purpose of a Corporation’ are failing to deliver on their fine words,” said Robert Eccles, Visiting Professor of Management Practice, Saïd Business School, University of Oxford. “If they don’t change their behavior, their credibility will continue to diminish. They need to start with a company-specific, stakeholder-inclusive ‘Statement of Purpose’ signed by every member of their board. They then need to publish an integrated report with metrics and targets that demonstrate how they are delivering on their avowed purpose.”

On August 19, 2019, the Business Roundtable (BRT) updated its Principles of Corporate Governance to redefine “the purpose of a corporation to promote an economy that serves all Americans.” CEOs from 181 publicly traded companies signed the Principles that purportedly signaled an end to Milton Friedman’s doctrine of shareholder primacy established in the 1970s. The announcement was welcomed by the public, investors, and other corporate stakeholders. It was positioned as a defining moment to usher in a new era of stakeholder capitalism.

In the midst of the COVID-19 pandemic and with a spotlight on inequality, expectations for companies have shifted. Today’s state of the world is testing both the breadth and durability of corporate purpose commitments, shifting the dynamics for thousands of companies as they confront new challenges and expectations. The current circumstances made for an unprecedented test of corporate purpose.

Read the full report here.

About the Test of Corporate Purpose

The Test of Corporate Purpose (TCP) is an initiative formed in 2020 to evaluate companies’ performance through the COVID-19 pandemic and social unrest in response to inequality and to assess alignment with recent statements of corporate purpose and commitments to stakeholder primacy. 

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Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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