This “law” was first defined in 1989. Thirty years later it seems far more prescient than anyone at the time might have imagined.
For example, this would be funny if it were satire:
While we’re in a mood for favourite quotations, here’s good one from G. K. Chesterton:
….let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.
Back to our social justice warrior CEOs. One wonders whether the concept of Chesterton’s Fence ever crossed their minds when they happily redefined the purpose of privately-owned companies, given the almost 400-year history behind such things?
I once briefly worked for a large banking and finance company and read with interest an interview with the CEO where he claimed to be “driving innovation in the insurance industry”. It’s a pretty hubristic and arrogant claim to be a “disrupter” of a centuries-old business model where risk remedies are described on paper, exchanged for money and then re-issued to multiple parties to distribute potential impact. It’s not quite as simple a business idea as “bake bread, sell bread”, but it’s not far off.
Of course, he wasn’t driving innovation at all; the company had simply launched a flaky and quite rubbish mobile phone app and meanwhile he’d taken his focus off the core business in all his excitement. He was unemployed within a year of that interview after a particularly damning set of end-of year accounts.
So, our coalition of the woke have decided their shareholders aren’t their first priority, eh? Well, let’s hope they’ve employed a good speech-writer for the next shareholder’s meeting, as things might become a little warm, particularly if the annual report isn’t stellar.
It’s great that the 181 CEOs have helpfully signalled to the market that they care less about shareholder value than being “good corporate citizens”, however that nebulous statement is defined.
Perhaps we might continue to invest our pension funds into their company stock, perhaps we might not, but our decision is more informed now than it was prior to their virtue signalling press release.
In related news, Brian Hartzer is rapidly completing his application form to join The Business Roundtable.