The recently revised, released and re-tweeted mission statement by the Business Roundtable promises to prioritize stakeholders among (not above) shareholders. That is, the needs of communities, employees, and suppliers are as important as those of investors.
More than a few critical articles suggested a “wait and see” approach, to see if the manifesto is more than just words and feel-good social media fodder. Some have scowled at the manifesto as simply ‘rhetoric,’ for public relations consumption. How will this commitment manifest from words to action?
Our question is, “how will this commitment continue to be part of the dialogue between CEOs and Wall Street?” How will CEOs frame this commitment to their boards of directors, to venture capitalists, to shareholders? While actions that demonstrate this commitment are obviously important, the challenge for CEOs is in determining how they will communicate the importance of other stakeholders to the shareholders.
Every quarter, CEOs have an opportunity to communicate with investment analysts in their earnings calls. These calls are transcribed and the transcripts are publicly available. We have worked with dozens of CEOs as they prepare for their quarterly earnings calls, and we can tell you that the prepared remarks by CEOs are carefully crafted and vetted. The key themes and messages are orchestrated to focus on the priorities of the company, to set context to the financial data, and to shed the most positive light possible on the executive leadership’s efforts of the last 90 days.
The question for us is this: how will CEOs frame this new commitment in the context of their quarterly earnings calls? How will they use this opportunity, every 90 days, to keep this new “wokeness” at the forefront? A quick spot-check of transcripts from the second quarter of 2019 shows hardly a mention of employees, communities or suppliers.
There are some slight exceptions. Abbott CEO Miles D. White twice mentioned the importance of patient access to one of their medical devices that serves patients with diabetes. But “patient access” is usually code-speak for increased health insurance coverage. The CEOs of AON and American Airlines acknowledged and thanked the hard work of their employees, but neither mentioned any investments in training, education, benefits or policies about inclusion and diversity — all core elements of the new mission statement.
These earnings calls signify the priorities of the organization. They also put a “stake in the ground” with analysts and, by extension, shareholders, about where company leaders are focusing efforts. It’s one thing to Tweet a quip about sustainability, community and employee dignity. We encourage CEOs to keep the tenets of the new mission statement at the forefront of their dialogue with Wall Street by highlighting their strategies to implement it. Over the next few quarters we will be listening to, reading and analyzing CEOs’ prepared remarks.