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U.S. CEOs Redefine Corporate Responsibilities

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Corporate America is committed to providing long-term economic benefit to all people rather than focusing on just shareholders' interests, Business Roundtable said Monday.

The updated statement on the "purpose of a corporation" moves away from the principles of shareholder primacy that has been endorsed since 1997, and redefines corporate responsibility.

The new statement was signed by CEOs of 181 major U.S. companies, who committed to lead their companies for the benefit of all stakeholders. This includes customers, employees, suppliers, communities and shareholders.

Jamie Dimon, CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable, said, "Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community's unwavering commitment to continue to push for an economy that serves all Americans."

The earlier view that publicly traded companies exist primarily to serve the interests of shareholders has influenced major decisions taken by companies, including CEO remuneration and whether employees can be fired.

The updated statement from Business Roundtable is significant as it shows American companies are redefining corporate responsibility in a rapidly changing world.

It also shows that in the current environment, companies need to invest in generating long-term value for the community and society in which they operate, for the shared prosperity and sustainability for all.

Nevertheless, some investors groups have criticized the new statement and urged the companies to come up with concrete steps on how they plan to proceed, rather than just issuing a statement.

The Council of Institutional Investors or CII expressed concern, saying in a press release that the new statement places shareholders last, and references shareholders simply as providers of capital rather than as owners.

"To achieve long-term shareholder value, it is critical to respect stakeholders, but also to have clear accountability to company owners. Accountability to everyone means accountability to no one," the group said.

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