The Business Roundtable thinks it has redefined what businesses ought to be in business for. And the new definition is proving controversial, upending the ways financial analysts and financial advisors typically view corporate success.

The Business Roundtable, or BRT—an association of chief executive officers from some of the biggest and most prestigious companies in the United States—in August released a statement saying that the purpose of a corporation extends beyond serving just shareholders—and that companies should serve customers, employees, suppliers and communities alike as stakeholders. It reasons that businesses should “promote an economy that serves all Americans.” Indeed, the group’s statement outlines a modern standard for corporate responsibility.

While these are admirable points, they likely are pretty confusing for financial analysts who go by the numbers when evaluating companies. Hence, institutions accustomed to analyzing corporations via their earnings statements might now have to scramble to develop new metrics. Some are choosing to fight the idea. 

For example, the Council of Institutional Investors expressed concern that the Business Roundtable’s statement undercuts notions of managerial accountability to shareholders. “We respectfully disagree with the statement issued by the BRT,” the council said in a formal release. “The BRT statement suggests corporate obligations to a variety of stakeholders, placing shareholders last, and referencing shareholders simply as providers of capital rather than as owners. [The council] believes boards and managers need to sustain a focus on long-term shareholder value.” To that end, “it is critical to respect stakeholders, but also to have clear accountability to company owners.”

The council is an association of pension funds and other employee benefit funds, foundations and endowments that promotes the interests of institutional investors. And it is not alone in its criticism.

The Harvard Business Review asks, “Is the Business Roundtable Statement Just Empty Rhetoric?” Meanwhile, The Wall Street Journal dubs the BRT’s proclamation a “recipe for confusion.”

To be sure, the BRT is playing into a broader zeitgeist among investors. Environmental, social and governance (ESG) investing is garnering large interest and assets from people and institutions that believe corporate citizenship exists for more than profit-making. By recasting corporate mandates, the BRT is raising a topsail to these tailwinds. Still, it has some investment professionals scratching their heads.

Dan Ahrens, chief operating officer of AdvisorShares, and the former portfolio manager of the Vice Fund, says of the initiative, “While the statement all sounds very nice, I feel it’s mostly just posturing. Not really ‘redefining the purpose’ or ‘moving away from shareholder primacy.’ I’d even go as far as to say it’s ‘political correctness’ in the modern corporate area.”

It may be that the Business Roundtable’s statement is aimed at millennials who, according to numerous studies, expect companies to stand for more than profits. In turn, financial services professionals are going to have to adapt to a new business language, new definitions and even new ways of doing business themselves. Many know they aren’t prepared.

A CFA Institute survey of nearly 4,000 members found that almost half (48%) admitted that their roles and practices would be “significantly different or nonexistent” within just five years. Among financial advisors, the rate was 58%, according to the institute.

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