- Anand Giridharadas set off shockwaves this week when he lambasted corporate board members in a discussion at the National Association of Corporate Directors’ annual summit.
- Giridharadas called out board members, telling them that “a lot of your children and grandchildren do not respect your work.”
- He also argued that board members failed by allowing companies to fuel climate change, disinformation, and opioid abuse.
- “Where were you?” Giridharadas asked. “Where were you in the run-up to the climate crisis? Where were you during widening inequality over the last four decades? Where were you in the run-up to the subprime crisis?”
- Visit Business Insider’s homepage for more stories.
Anand Giridharadas set off shockwaves this week when he bashed corporate board members in a speech at an influential summit full of the very directors he was criticising.
Giridharadas’ comments at the National Association of Corporate Directors’ annual summit on Monday sparked disgust, rage, and threats to quit the NACD, Business Insider reported earlier this week. The writer, known for his harsh criticisms of corporate America, accused the corporate board members of inaction on issues such as climate change, economic inequality, and the opioid crisis.
“There were people who were like, ‘I want my money back. I’m not going to sit here and listen to this,'” Kent Lundberg, who attended the summit, told Business Insider.
At the crux of Giridharadas’ argument was the idea that certain corporate commitments, such as the 2019 Business Roundtable declaration that a company’s purpose is to serve more than just shareholders, are empty rhetoric. Companies will never truly push for meaningful change, Giridharadas argued, unless they are forced to by legislation.
“In America today, a country we call a democracy or a republic, when there is a fork in the road between what is good for money and what is good for people, what is good for money routinely wins,” Giridharadas said, according to a recording of the event obtained by Business Insider.
Giridharadas asked directors, ‘Where were you?’
Giridharadas argued that the board members failed to prevent American companies from contributing to problems such as climate change, disinformation, and opioid abuse.
“As Facebook has been spewing disinformation, creating a platform for white supremacy and fake information to toxify our election, where were independent directors like Peter Thiel?” Giridharadas asked. “Or maybe that’s an easy one.
“This being a group of corporate directors, I ask again: Where were you?” Giridharadas added. “Where were you in the run-up to the climate crisis? Where were you during widening inequality over the last four decades? Where were you in the run-up to the subprime crisis? Where were you in the run-up to the opioid crisis? Where were you?”
Giridharadas ended his remarks by getting even more personal, telling attendees that “a lot of your children and grandchildren do not respect your work.”
Despite the backlash, NACD’s CEO, Peter Gleason, stood by the organisation’s decision to have Giridharadas speak at the summit. Giridharadas’ remarks were part of a discussion led by Gillian Tett, the chair of Financial Times’ editorial board.
“Key to NACD’s mission, especially at our annual NACD Summit, is to expose our 21,000 members to contrasting views on the issues that will redefine how businesses create value,” Gleason said in a statement to Business Insider.
Read the full transcript of Giridharadas’ remarks:
Giridharadas: Gillian, every year without fail around January 1, I do exactly what the Business Roundtable did last August, which is make a big statement about all the ways in which I plan to change in the coming year. I am always certain to never include any enforcement mechanisms, to insist on zero accountability, and to ensure that I am the judge and jury about my compliance. And as it happens, I have never, ever complied with the declarations I make to not eat french fries, to go to the gym more, and so on and so forth. And maybe those listening are the same as me.
The statement that was made last August, while it was billed as being very significant, while it landed on the front page of The New York Times, while a lot of journalists, frankly, uncritically put it on the front page, was nothing more than a pledge of voluntary virtue. I said it was inadequate before we have data, but now we have some data, which I’ll get to in a second. But I said it was inadequate on day one in the New York Times story.The last quote of the story was me.
I said it was inadequate because we know the issue in American life is corporate power. We know [about] issues around how people treat stakeholders like workers by underpaying them. Stakeholders like government by paying zero in federal income taxes in many years, as many companies do. Issues like harming the environment as a matter of course, or harming people’s bodies through an opioid crisis. We know that those issues exist.
Not because people have malice in their hearts, but because they have too much unaccountable power. The power has gone way out of whack. Unions are not strong enough, government is not strong enough to check this power.
The power has gone way out of whack.
What the Business Roundtable did not say in that statement was anything about actually having the teeth of the law and policy to enforce its new commitment to voluntary virtue. So I was sceptical.
I get a phone call that day or the next day from Jamie Dimon, who is the chairman of the Business Roundtable, very proud of his little baby, this statement. And he wants to talk, because he’s hurt by my quote. So we’re both on vacation at the time, but we have … an on-the-record phone call.
In the course of this phone call, I say: “You know, this is a wonderful statement, Jamie. Apparently you all care about stakeholders now, which is the corporate word for ‘people.’ That’s terrific. Why don’t you lobby? There are actually legislative proposals from Elizabeth Warren and others to make these kinds of things the law. If you’re for this, you can make it the law: Pay people enough, don’t hurt the environment, no money in politics, etc. Why don’t you get behind such proposals?”
“Oh, no, Anand, I could not,” Jamie said.
And I said, “Well, what about forcing companies out of the Business Roundtable if they violate these principles?”
“Oh, Anand, we’re not a police force.”
“Well, oh, Jamie, well, what about the fact that many companies on this list continue to treat workers badly to this day, even after they have signed this?”
And Jamie Dimon says, “Well, Anand, a lot of people in America just don’t like to work.”
Tett: Is your issue that you think they should be adopting a stakeholder vision but are not actually? Or do you think it’s actually wrong to even chase after a stakeholder vision?
Giridharadas: Well, a stakeholder vision is just a vision, the way my New Year’s resolutions are just New Year’s resolutions. The way to make it real and to show their sincerity would be to join the rest of us who are fighting for stakeholder capitalism to become the law, which is the only way it actually works. Given that this is a group of corporate directors, I think you have to understand where my scepticism is coming from.
The question I would have for everybody who was a corporate director in the years running up to the signing of that statement last August or who continue to be today, my question would be: Where were you? Where were you all these years? The statement was great. Where were you?
The statement was great. Where were you?
Where were you when fossil-fuel companies were causing the planet to be uninhabitable over time, and they knew it? Where were board members like Ken Frazier from Exxon?
When Fox News and the News Corp. were polluting the minds of Americans, spreading disinformation, creating a non-fact-based coalition in this country that now has elected Donald Trump, where were independent directors like Joel Klein of the News Corp.?
When companies were paying zero in federal income taxes â€” an indefensible practice â€” where were independent directors like Indra Nooyi at Amazon?
As Facebook has been spewing disinformation, creating a platform for white supremacy and fake information to toxify our election, where were independent directors like Peter Thiel? Or maybe that’s an easy one.
When the National Restaurant Association was lobbying against minimum-wage increases, where were those boards of directors?
When Fannie Mae and the other banks were doing their shenanigans that [took] millions off their feet, as you covered in 2008, where were those boards of directors?
So I have a very serious question about why it is that we would trust voluntary virtue by corporate America â€” some new term, “stakeholder capitalism” â€” when we have not changed the personnel, we have not changed the rules of the game, we haven’t changed the incentives, we haven’t changed the law, and we’re suddenly expecting everybody to not eat their french fries just because they promised.
Tett: Well, those are strong words, and it’d be interesting to see what Glenn has to say about it. The polls suggest a third of the companies think they already have a stakeholder mantra, and a third say they’re going to have a stakeholder mantra. So that puts even more emphasis on what that will actually mean in practice.
But before we turn to that, I’m curious: Do you think that COVID-19 has in any way changed this debate or should change this debate as far as corporate boards are concerned, if they’re actually going to try and observe some of their virtuous new resolutions?
Giridharadas: I’m glad you brought that up, because I forgot the other part of what I was going to say, which is: I was a sceptic of this statement from the beginning, but, as I told you, some data has since come in. It’s been about a year and two or three months.
There are two major pieces of academic study of the Business Roundtable’s practices in the ensuing year after this statement. One study that I believe was a friendly study commissioned internally â€” I think funded by the Ford Foundation, but a friendly study where they looked at themselves â€” concluded that signing the statement actually made no difference, made you treat people no better when COVID hit. COVID was the first great test, as your question indicates, of these lofty new values that were announced in August. You’ve got the values in August, then you’ve got COVID hitting in February and March. What happened? Their own study concluded: Not much.
There was another study that was not funded by the corporate institutions in question. It was an independent academic study. That study actually found that companies that signed the statement treated workers and communities worse during COVID than companies that did not sign this statement. And this is an incredibly important point, Gillian.
There’s been, by the way, other versions of this research. Regular people who are asked to do a small little nudge for climate change, one lightbulb or whatever, their support for a carbon tax actually goes down. There’s an effect called moral licensing, which is exactly what a lot of these companies have engaged in.
The statement last August, the declarations of stakeholder capitalism but also everything else that has gone along with that â€” philanthropy, impact investing, social-venture this, social-venture that, social enterprise, double bottom line, triple bottom line â€” what it has done in aggregate, in my view, in my reporting, frankly, it has given moral licence to companies to not only continue doing what they were doing before, but to do it even more unapologetically.
So, we are talking … about three or four types of activities. We’re talking about shafting workers, whether that’s wage theft, whether it’s union-busting, whether it’s underpaying people, fighting against wage increases.
We’re talking about tax evasion and avoidance â€” I mean, just the unpardonable fact of all these companies that pay zero in federal income tax.
We’re talking about lobbying for what I call bottle-service public policy, where companies are pursuing policy that is good for them in the velvet-rope section of the club but bad for virtually everybody else in the club. Any number of other practices that we all know about â€” the rigging of the system, money in politics, where the balance of power between regular people and big companies has gotten so frankly out of whack that in America today, a country we call a democracy or a republic, when there is a fork in the road between what is good for money and what is good for people, what is good for money routinely wins.
When there is a fork in the road between what is good for money and what is good for people, what is good for money routinely wins.
This is â€” I have described it elsewhere without mincing words â€” a hijacking of the public good by big corporations. And I do not think the corporate equivalent of New Year’s resolutions is going to fix it. This being a group of corporate directors, I ask again: Where were you? Where were you in the run-up to the climate crisis? Where were you during widening inequality over the last four decades? Where were you in the run-up to the subprime crisis? Where were you in the run-up to the opioid crisis? Where were you?
Tett: In terms of ESG, then, and purpose, you’ve regarded it as being a bit like the members of the Catholic Church in the medieval years seeking indulgences from the priests â€” i.e., a bit of a blessing to carry on as they were before. If you were magically turned into president of the United States tomorrow, what would you do, or what would you counsel the president, if you had an ability to talk to him right now, to fix all this?
Giridharadas: I called my book “Winners Take All” for a reason, and I would say the remedy flows out of the title â€” the inverse of the title. The only solution to a winners-take-all country is a country in which the winners take less. That’s point No. 1.
Point No. 2 is the only way the winners are ever going to take less â€” and if you listening to this are honest with yourself, maybe even close your eyes for a second, if you’re honest with yourselves, I think you know the winners are not going to take less voluntarily. There may be a program here or there. It’s not going to happen; it’s never happened. It’s not how history works. So the only way in which you’re going to get the winners taking less is by making it mandatory, by using the power of the law. You know this as someone who writes about these issues and knows history.
We didn’t get children’s little fingers out of the factories by appealing to the voluntary virtue of factory owners.
We didn’t get children’s little fingers out of the factories by appealing to the voluntary virtue of factory owners.
We didn’t deal with the unsafe conditions revealed by the Shirtwaist Factory fire in New York that led to modern labour protections â€” we didn’t deal with that because companies had voluntary virtue.
We didn’t fix sexual harassment in the workplace to the extent that it has been fixed because companies were feeling voluntarily virtuous.
We didn’t stop open corruption â€” now we have a slightly more insidious form, but we didn’t stop the kind of bags-of-cash corruption because companies felt voluntarily virtuous.
I ask you: What major change, what major rebalancing of power, what major shift in favour of humanity and of workers and of equity, which shift do you have in mind that that has occurred in American history because of voluntary corporate virtue? We need to change who has power. We need to change how power works. And, frankly, if you are a person in a corporation â€” actually, not just a person but a director of a corporation â€” you have a very critical choice here about whether you want to be on the right side of history.
Tett: Do you think that if we have a change of administration in the next month that any of this is going to change?
Giridharadas: I think the arguments I’m making, if you looked at the Democratic primary, were much more consistent with the more thoroughgoing visions of change proposed by Bernie Sanders, Elizabeth Warren, and others. Joe Biden almost ran completely against that kind of vision of change. I wouldn’t say completely against, but certainly within the Democratic spectrum. I have concerns about that. But there’s no question that between him and Trump, it’s fascism versus democracy.
There’s no question that between [Biden] and Trump, it’s fascism versus democracy.
But here’s my hope for Joe Biden. And I don’t say this as a Joe Biden fan or stan going back years, but here’s my hope: Joe Biden’s great political superpower â€” and I’m quoting someone else I saw on Twitter say this â€” is that he never forgets whom the median voter is. It’s very easy for all of us in the media or in elected office to just forget where the median voter is psychologically. And you get caught up in your own wokeness, or you get caught up in Medicare for All or whatever, and you forget where the median voter is, and you’re not speaking to them anymore.
Joe Biden’s superpower is an almost obsessive, maniacal focus on that median voter, perhaps to the detriment, sometimes, of his evolution on policy. I don’t know how you can come out of COVID-19 with a heart still beating in your chest and not support Medicare for All. But here’s my hope.
I don’t think Joe Biden is an ideologue for centrism the way Bernie Sanders and Elizabeth Warren are ideologues for progressivism. In other words, I think Joe Biden’s convictions are in many ways the absence of deep, profound ideological convictions.
Joe Biden’s convictions are in many ways the absence of deep, profound ideological convictions.
If those of us who want real change in this country can advocate for it and can make the cost of him not doing these things greater than the cost of him doing these things, I think there’s an interesting Nixon-to-China possibility of a Biden presidency, because his skill, in addition to knowing where the median voter is, is in communicating things in ways that make them sound American and patriotic and simple rather than vaguely socialist and French.
Tett: So last question before I go is do you think that corporate boards today should be preparing for a shift in the zeitgeist in the next few months which demands more of them than what they have done?
Tett: Will the public be demanding it?
Giridharadas: But it’s been happening. It’s been happening since before the Occupy movement. It’s been happening since before everybody bought that Piketty book and some of us read it.
Donald Trump is the most plutocratic populist you could conjure, but the fact that he won was revealing about a certain amount of dissatisfaction with corporate power and plutocracy, even on the right, and with crony capitalism, as it’s called. So the upheaval has been happening. The pitchforks have been getting sharpened for some time now.
The pitchforks have been getting sharpened for some time now.
I think the question is, if you are a corporate director â€” let me put it this way: So many of the people who read my book are young people who then buy it for their parents and grandparents, often people who have jobs as corporate directors or CEOs. I get such a large amount of mail about this. I just want to say one quick point.
A lot of your children and grandchildren do not respect your work. Some of them say this to you; some of them don’t. But we know this from public attitudes. You know this from survey data. There is a sense among younger people coming of age in the most diverse, open-minded generation in American history that what their parents and grandparents did in corporate boardrooms near broke America.
And if for no other reason than to have a less awkward Thanksgiving this year with your relatives, try to get on the right side of history.
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