October 23, 2020


Fill me in: In recent years, the idea of stakeholder capitalism has gained traction among some investors, activists, and policymakers as a new model of corporate governance. Under this model, corporations essentially give greater consideration to the interests of a broader group of “stakeholders,” rather than just their “shareholders.” While corporations have legal duties to pursue strategies to help investors achieve return, businesses are increasingly having to address other issues presented by employees, consumers and others.

What happened? As part of this ongoing dialogue, the Bipartisan Policy Center, the U.S. Chamber of Commerce, and JUST Capital participated in a discussion exploring how corporations are increasingly gathering input from a larger group of stakeholders and what this growing trend means for corporate governance.

Key quotes:

“There clearly is a role for corporations in making our society better. That’s part of what they’re there for, but they’re also there to serve their investors, employees, and others.” — Tom Quaadman, executive vice president, U.S. Chamber Center for Capital Markets Competitiveness.

“It’s extremely important that there’s somebody who owns this within a company. Too often when we talk about sustainability or ESG [environmental, social, and governance] issues, it gets split up in many different parts of the company. And really somebody has to own it, because then the business community can work directly through unified voices—in conversation with investors, policymakers, other parties—and we can actually come up with a system that’s going to work,” — Quaadman.

“It’s about balance. The pendulum has swung too far in favor of shareholders and we’ve forgotten what it means to create value for other stakeholders…The trick now is to define that,” —Martin Whittaker, CEO of JUST Capital.

“Regardless of the election outcome, the same basic trend will continue…We’re going to be talking about the need for stakeholder performance and how markets and business can work better for more Americans.” — Whittaker.

“We have to respond to the needs of all of our stakeholders…Companies and the business community must be an incredible, strong leader, must have a strong voice in a lot of these conversations. These are not issues government can tackle, it’s something that the business community and companies must lead on. We take this work very seriously,” — Christopher Womack, president of external affairs, Southern Company.

Our take: In 2019, the Chamber launched the Project for Growth and Opportunity (Project GO), an initiative pairing innovative business solutions with sensible and sustainable policy approaches to help address societal challenges.

Project GO is a multiyear, multifaceted effort to showcase and advance corporate solutions to pressing societal challenges including:

  • Promoting corporate board diversity;
  • Examining responsible ESG disclosure grounded in materiality;
  • Expanding investment opportunities for Main Street.

Numbers to know: 33 and 84. Studies show diverse corporate leadership enhances performance and profitability:

  • Companies in the top quartile for ethnic and racial diversity on executive teams are 33% more likely to have industry-leading profitability, according to a recent report from McKinsey & Company.
  • 84% of board directors say that diversity enhances board performance, according to a 2018 Price Waterhouse Coopers survey.

What’s next:Look for the stakeholder capitalism discussion to continue this fall and into the next year when the 117th Congress convenes. The discussion on how best to balance the needs of stakeholders and shareholders is sure to deepen in 2021.

Additional Resources