The paper examines the Business Roundtable’s (BRT) 2019 Statement on the Purpose of a Corporation, which called for America’s largest firms to focus on delivering value to all stakeholders rather than just shareholders. The study analyses whether firms that voluntarily signed the Statement engaged in stakeholder-centric practices either before or after the signing of the Statement. The research also compares the environmental, social, and governance (ESG) practices of signatories and their peers.

The study found no evidence to support the idea that firms voluntarily signing the BRT statement were already leaders in stakeholder-centric treatment prior to the signing. Furthermore, signatories violate environmental and labour laws much more frequently than their peers, highlight a higher carbon emissions rate, rely more on government subsidies, and are more likely to disagree with proxy recommendations on shareholder proposals. The study sheds light on the role of firms and investors in walking the ESG talk vs. merely talking about the ESG walk.

The paper suggests that ESG rating agencies need to improve their processes and consider other factors such as compliance records and carbon footprint to complement traditional ESG scores to better achieve their objectives. It is imperative that governments must monitor, understand and enforce business compliance with environmental and labour laws in order to support stakeholders’ interests in a fair manner. Finally, investors themselves should take notice of the research’s findings and reevaluate their approach to highlight practicable ESG factors.