“Business is changing,” Murray says, and many business leaders recognize that and see that the way forward must include focus on equality, racial justice, climate change, and more.

But not everyone agrees, including Harvard Law’s Lucian Bebchuk, who recently published a paper titled The Illusory Promise of Stakeholder Governance. Joining the episode along with Bebchuk is Harvard Business School’s Rebecca Henderson, whose book Reimagining Capitalism: How Business Can Save the World expands on ideas that put her squarely at odds with Bebchuk’s thoughts on stakeholder capitalism. 

Bebchuk believes that all the corporate talk of stakeholder capitalism is “largely cosmetic.” In his research, he and his colleagues have found that when faced with decisions, CEOs rarely give weight to the wants and needs of stakeholders, largely because there is little value or profit incentive to do so. 

He also points to his study’s finding that many CEOs who signed 2019’s Business Roundtable statement on stakeholder capitalism didn’t get board approval to do so because they felt the statement did little to change business as usual at their companies. But Henderson doesn’t see that as negatively as Bebchuk does.

“I believe that shifting the goals of the corporation would make an enormous difference,” Henderson says. “I don’t think you need to do a wholesale shift in corporate governance in order to do that.”

Both Bebchuk and Henderson agreed that society can not expect business leaders to choose to do good with no incentive to do so. Henderson says she believes there is a class of actions that benefit both the shareholders and stakeholders that have been overlooked owing to years of shareholder primacy. Murray notes that the CEO guests on Leadership Next often echo that view that there are many win-win strategies that allow profit and social good. 

Murray also says that Fortune has found that the companies that are doing best are those that have a long-term view and are focusing on their employees and other stakeholders. Bebchuk, however, says that there are many actions that are not win-win, and in the economics of business, there are tradeoffs that must be reckoned with. Henderson answered that concern by saying she thinks that business has a collective action problem, wherein individual businesses must act because all businesses will be worse off if the glaciers melt and the cost of labor keeps getting pushed down below a living wage. 

Around the 24-minute mark, the debate turns to the role of government leadership in addressing the causes at which stakeholder capitalism takes aim. Bebchuk says that part of the reason governments are often slow to act is the thought that the private sector will come to the rescue, but his findings and other research have shown that is often not the case. So perhaps, he posits, stakeholder capitalism is slowing the rate of societal change. Henderson doesn’t disagree, but she says she thinks one of business’s most crucial responsibilities is to rebuild government and the institutions that have failed to make progress on these issues. 

“What we should do is look at what people do, rather than what people say,” Bubchek says in closing. And Henderson agrees but still thinks that the rhetoric from purpose-driven CEOs matters and says she feels that pushing them to act on their messaging is a way forward out of the “desperate” times society finds itself in today. 

To hear the debate in its entirety, including back-and-forth on barriers to changing the status quo in business and how investors can drive change, listen to the full episode.