Beauty is in the Eye of the Stakeholder

Beauty and value are created by observers.  Shareholders are your financial observers, but others have long noticed what your business decides and delivers.  This is capitalism as connected community.  

Friedman and Lombardian supporters will always have a voice.  Friedman once said: “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits”. This short-termism has undoubtedly served some.  But the inequalities of economies, climate and pandemic, demand much, much more.   

While shareholders surfaced with the financial boom of the East India Company in the 1600’s, stakeholders have been around long before that.  

Corporate social responsibility dictates what a company’s role is today and, importantly, what it offers the communities it serves tomorrow.  

These theories advocate for the interests of all stakeholders even if it reduces company profitability.  Companies hold a duty to their shareholders but also to their customers, suppliers, partners, employees and the wider community.  Companies are now part of a communal value-creating ecosystem.   

 Economist Mariana Mazzucato might agree: stakeholder management creates a business delivering results across a spectrum of obligations.  It ensures equitable relationships and a public return for a public investment.  This is a shared and sustainable capitalism that sometimes defies economics’ founding fathers.    

Turn from Friedman to leaders like Fink who place sustainability at the heart of asset management.

While shareholders are potentially more relevant than ever in tough economic times, they take a seat as part of a wide, broad audience.  

Profit is required, of course.  It determines the success or failure of a company and is relevant to shareholders and stakeholders alike.  But play to the crowd and hear them roar.  Look after your stakeholders and you will weather the critics to prosper for years to come.