Week 29: “Plus Ça Change, Plus C'est La Même Chose” (Jean-Baptiste Alphonse Karr, 1849)

Dear all,

Hope is not a strategy. Stakeholders are no more. The era of “stakeholder-ism” is overdue.

No matter how earnestly companies proclaim their support for “stakeholder capitalism” — the popular promise that they now take care of employees, communities, the planet, and other “stakeholders,” not just themselves — profits still come first.

The more foundational tension is whether it’s even possible for companies to solve the societal challenges they claim to be determined to fix. For years, the corporate sector has been using, and misusing, the term, addressing the wider accountability of corporations in relation to their business operations.

Under stakeholder capitalism, organizations create long-term value by taking into account the needs of all their stakeholders: among them employees, customers, suppliers, local and global communities, lenders, and shareholders.

It feels like a lifetime ago that, in 2019, 181 CEOs of the biggest companies in the United States came together to redefine the purpose of a corporation: to promote “an economy that serves all Americans.” We can laugh at the hubris of the proclamation, but it responded to a real demand for businesses to stand for something beyond profits.

The year 2020 intensified that demand. Above all, it was a time when businesses seemed to understand that, in the big picture, they operate because of their customers, employees, suppliers, communities, and shareholders, and it was time to start acting with all those interests in mind.

Since 2020, the stakeholder capitalism movement has had a rough go. Emmanuel Faber, who famously boasted that his company, Danone, had “toppled the statue of Milton Friedman” with its purposeful approach to capitalism, was sacked. Nike cut 30 percent of its sustainability staff. And Larry Fink, one of the leading proponents of stakeholder capitalism, stopped talking about it altogether.

What is intriguing is that attacks on ESG are not really leading to an explicit call to return to Friedman’s shareholder-only mantra. Instead, right-wing voices want business to respect different stakeholder interests; national security concerns, energy needs, patriotic cultural values, and so on.

So, one way to frame the rise of new geo-shareholderism is to think through the implications of how government and business work together. In other words, ask: Which stakeholders matter? Skip the rest.