3 Reasons Why Strategic Business Leaders Embrace Stakeholder Capitalism

Putting Purpose, People, and Planet Front and Center

1. Economic and Social Fault Lines Have Been Sharply Exposed Due to the Covid-19 Global Pandemic

“Viruses may cause disease in individuals, but pandemics play out in populations.” A recent article published by Scientific American explores the enormous social upheaval which the pandemic has, in part, caused but has also largely merely exposed. The world is struggling with multiple crises caused by entrenched social, economic, and power inequities. This can best be understood through the concept of “syndemics;” synergies among epidemics of poverty, illness, social injustice, and environmental devastation which serve to exacerbate each in turn. There is no “business as usual” in a world on fire.

2. The Most Prominent Voices in Business Are Publicly Advocating for the Stakeholder Model

In August 2021, Business Roundtable marked the second anniversary of the 2019 Statement on the Purpose of a Corporation. On August 19, 2019, nearly 200 CEOs of America’s largest companies committed to long-term value creation for all their stakeholders. Business Roundtable President & CEO Joshua Bolten states:

“Two years in, Business Roundtable CEOs have strongly demonstrated a commitment to the Statement. They know there is more work to do, and I am confident that they will continue to rise to the challenge.”

Additionally, last year The World Economic Forum released a new “Davos Manifesto,” which states that companies should “pay their fair share of taxes, show zero tolerance for corruption, uphold human rights throughout their global supply chains, and advocate for a competitive level playing field.”

Although the impact has not been as immediate or far-reaching as its early promise, corporate embrace of stakeholder capitalism is the path forward. “Rather than another ‘exposé’ of so-called corporate stakeholder hypocrisy, what’s needed now is the hard foundational work to strengthen the market infrastructure and build the operating norms that underpin this new approach.”

3. The Stakeholder Model is Integral to Attracting and Retaining Millennial and Gen Z Clients, Customers, and Employees

To scale their impact or even to remain competitive, companies must be purpose-driven and socially responsible. “The events of the past year show the steadfast determination of Generation Z to make their mark,” says Porter Novelli CEO Brad MacAfee. “This research not only reinforces what we’re seeing in the marketplace, but also how companies can engage this generation that is so driven to change the world for the better” .

Be the Company People Want to Engage with, Purchase from, and Work for in the Long Term

“While the majority of the Millennial and Gen Z respondents in Deloitte’s 2020 Millennial Survey stated they do not see business as a force for good, two-thirds of the respondents acknowledged that they’re pleased with their employer’s response to the pandemic, feeling they were set up for success…Unsurprisingly, data suggests that this has a positive impact on employees’ loyalty towards their employers, for six in 10 of the respondents said, “their employer’s actions made them want to stay where they are for the long term.”

Commitments to ethical business through ESG, CSR, and DEI initiatives and sustained follow through will ensure loyalty and enthusiasm in the markets you are most eager to reach. Aligning your organization with the Stakeholder Business Model is Purpose-Driven Leadership today and Strategic Leadership for an ever-changing tomorrow.