Promises made to stakeholders frequently lack substance.

Since the Business Roundtable (BRT) announced in 2019 that its member CEOs would commit to leading their companies for the benefit of all stakeholders, over 130 companies have signed the pledge. However, a recent study conducted by Professor Lucian Bebchuk of Harvard Law School suggests that little progress has been made in the shift towards prioritizing stakeholders over shareholders.

The study found that most companies continued to prioritize shareholder primacy in their corporate governance guidelines, with very little mention of the BRT commitment in their statements regarding investment policy. Furthermore, the companies did not mention stakeholders in their statements of corporate purpose, questioning the authenticity of the BRT's commitment.

Despite the initial stir caused by the BRT's announcement, the study's findings indicate that it takes time, encouragement, and higher transparency to ensure that stakeholder issues receive the attention they deserve. The approach emphasizes engagement activities to understand the culture of the organizations being invested in and help them progress for the benefit of all parties.

Since mid-2019, affected companies have taken initial steps towards implementing the BRT commitments, but comprehensive industry-wide transformation and full implementation are still ongoing and require intensified efforts across sectors. Only a few companies that did reference the BRT commitment did not include shareholder approval in their statements, suggesting a potential recognition of the importance of stakeholder engagement.

The study's findings also suggest that the BRT's announcement may not have had a significant impact on the companies' investment policies. Most companies explicitly stated that the commitment to the BRT statement did not require any changes.

However, there has been a shift in corporate values, with companies aligning their annual reports more closely with social values, focusing on "integrity", "people", and "community" in relation to employees and customers. This shift was signified as a "profound change" and the "end of shareholder primacy" when the BRT made its announcement.

In conclusion, while the BRT's announcement of prioritizing stakeholders over shareholders has not been reflected in the companies' communications, policies, or shareholder approvals according to the study, there are signs of progress towards a more stakeholder-focused approach in corporate governance. The study underscores the need for continued efforts to ensure that the commitment to stakeholder prioritization becomes a reality in practice, not just in words.