August 30, 2019 / 5:53 PM / 21 days ago

Critics accuse U.S. CEOs of contradicting pledge to work for more than shareholders

BOSTON (Reuters) - A pledge by top CEOs to work for more than shareholders drew criticism on Friday from investor activists, who accused the corporate leaders of contradicting their inclusive message by lobbying against social and environmental reform efforts.

The activists, members of a New York interfaith group, faulted the CEO trade group known as the Business Roundtable for taking a public stand that corporations should seek to promote the interests of a wide range of stakeholders, including workers and communities, while pressing for such rule changes as making it harder to file proxy resolutions.

The disconnect between the positions is “kind of glaring,” said Josh Zinner, CEO of the Interfaith Center on Corporate Responsibility. “It’s important to point out the inconsistency here.”

The Interfaith Center says it is a coalition of more than 300 institutions with more than $500 billion in total investments. Its participants have successfully used resolutions to get companies to disclose more about issues like climate change risks and human rights concerns.

In a letter sent late on Thursday, Zinner praised the Roundtable’s interests beyond the bottom line but asked the group to dial back efforts such as trying to raise the thresholds needed to file and resubmit resolutions.

A Roundtable representative did not immediately respond to a request for comment.

The Roundtable’s Aug. 19 “Statement on the Purpose of a Corporation” was signed by the heads of 181 U.S. companies, including those of Amazon.com Inc (AMZN.O), American Airlines Group Inc (AAL.O) and JPMorgan Chase & Co (JPM.N).

However symbolic, the Roundtable statement broke with the orthodoxy that corporations should only serve shareholders, though some investors and business people worry the new approach could diminish competitiveness.

The Council of Institutional Investors, representing big public pension funds and asset managers, said the all-stakeholder focus also could make CEOs less accountable.

“Accountability to everyone means accountability to no one,” the group said.

Reporting by Ross Kerber in Boston; Editing by Howard Goller and Dan Grebler

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