Part I of the shareholder to stakeholder series (the purpose of corporations – tale of two theories) compared the dominant theory of shareholder wealth maximization (SWM) against stakeholder theory, now explicitly endorsed by organizations as diverse as the Business Roundtable and the World Economic Forum. While these theories may appear to stand in stark opposition to each another, by looking at them across a longer timeframe we can evaluate the interim trajectory of long-term value-generative plans by including a thoughtful focus on environmental, social and governance (ESG) information.
Part II of this series (Becoming a future maker – from shareholder to stakeholder) explores the implications of a shift toward stakeholder capitalism for asset owners and how they might position their investment programs in response. Preparing for this transition has been made all the more urgent by the COVID-19 pandemic, which has shone a light on company-specific practices in relation to their non-equity stakeholders. In particular, the way companies treat their customers and workers during this time of crisis is likely to have significant implications for their businesses for years to come.
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