From Shareholder to Stakeholder
Corporations are recognizing new duties in areas that are not strictly related to their financials. Succeeding in these non-financial pursuits requires the same efforts and the same kind of accountability as in formal finance though.
It is an old truism that continues to be invoked because of its wisdom: you can’t manage what you don’t measure. We need to measure because we need to manage and the number of things we need to manage is only increasing. Where businesses were once content with reporting on financial issues for a long time, a new trend in non-financial reporting is just beginning.
Perhaps the biggest milestone came in 2019 when the Business Roundtable, a group of big company CEOs that tries to guide the imperatives of global business and economics, said that the era of shareholder capitalism was giving way to stakeholder capitalism. Stakeholder seems an odd construction, even somewhat foreign, and the concept of replacing the shareholder at the center of finance and economics seems odder still. But stakeholder capitalism doesn’t seek to upend the shareholder, it simply seeks to acknowledge others as co-equals.
The Business Roundtable’s idea of stakeholders includes shareholders but also acknowledges employees, customers, partners and local communities. Going back to the idea of measurement and management, stakeholder…
