From shareholder primacy to stakeholder capitalism

Free-enterprise capitalism must be grounded in an ethical system based on value creation for all stakeholders. Money is one measure of value, but it is certainly not the only measure.

The single-minded pursuit of profit, it turns out, is no way to think of or run a planet for long-term health. To take just one illustration, none of the world’s top industries would be profitable today if they had to pay for the unpriced natural capital they exploit.11 On the upside, however, I believe that we are living through the early stages o

Of particular note for business corporations, our research showed that visionary companies reject the idea that the sole purpose of a business is to maximize shareholder wealth; visionary companies pursue a core purpose beyond making money AND they generate substantial wealth.

What’s more, Friedman’s narrow view on the business of business has lost credibility: in the face of twenty-first-century challenges, firms need a purpose far more inspiring than merely maximising shareholder value and, as Chapter 6 illustrates, a growing number of enterprises are finding ways to give themselves one.

This marks the end of an era that never was: the era of “stakeholder capitalism.” The notion that businesses have a responsibility that extends beyond their shareholders to society at large. I’ve served on seven public, and dozens of private, company boards. Spoiler alert: This is, and always was, bullshit. The CEO/board has only one group of stake

so-called great risk shift, through which corporate America has stabilized its own income statements over a generation by off-loading uncertainty onto workers; and the ways in which shareholders were running companies more and more for themselves, to the detriment of every other stakeholder.