Two years after the Business Roundtable statement on stakeholder capitalism, has anything changed?

August 18, 2021, 10:39 AM UTC

Good morning.

Tomorrow marks the two-year anniversary of the Business Roundtable’s statement on the purpose of business, which either did—or didn’t—usher in a new era of “stakeholder capitalism,” depending on whom you believe. 

Among those who argue it didn’t are Harvard Law professors Lucian A. Bebchuk and Roberto Tallarita, who recently released their second study on the subject. They examined the Business Roundtable members’ corporate governance guidelines, corporate bylaws, proxy statements, etc., and found, well, nothing new. Their conclusion: the whole exercise was “mostly for show.”

But in an op-ed for Fortune, Martin Whittaker and Peter Georgescu of JUST Capitala non-profit organization created by billionaire hedge fund manager Paul Tudor Jones to advocate a “more evolved form of capitalism,” dispute that view.

“Done properly,” they argue, “stakeholder capitalism…doesn’t necessarily need policy interventions, corporate governance reform, or amendments to company documentation to be pursued.” 

Instead, it’s about “the disciplined generation of long-term value” by serving the needs of people and planet. Rather than focus on governance changes, they argue, companies should focus on how their stakeholder commitments “can best be measured, and how (they) can be used as an engine for better financial performance.” Over the long term, returns to shareholders and returns to society need not be in conflict.

Readers of this newsletter know that I agree. As a long-time student of business and society, I see ample evidence that there is more going on here than a public relations blitz. The best companies, for a variety of reasons, have reframed the way they think about generating value, for their shareholders and for society. The change is not a panacea and it’s not a solution to every problem. But it is an important move in the right direction.  

Interestingly, JUST Capital has some new polling data, completed for the anniversary and shared with CEO Daily, that shows the American public also agrees. Some 65% of respondent think that companies are “doing well at promoting an economy that benefits all Americans”—up from 58% in 2020 and 45% in 2019. 

But the respondents also continue to believe that companies are run mainly for the benefit of shareholders, with 68% saying large U.S. companies are having a positive impact on shareholders, and 61% saying they are having a positive impact on customers, while only 51% say they are having a positive impact on society overall, and only 41% say they are having a positive impact on the environment. You can dive further into the polling data here.

Other news below.

Alan Murray


Kabul chaos

Evacuations are gaining pace in Kabul, with more than 2,200 diplomats and civilians now evacuated and governments around the world debating whether, and just how many, Afghans they will resettle. The Taliban have also said they will not retaliate against people who worked with the former government, and that women would have some rights. But that's not providing much comfort for Afghans who remember previous Taliban rule. Meanwhile, WhatsApp has shut down a group set up by the Taliban as a "complaints line" to report violence and looting. Reuters/FT

$110 billion

Norway's sovereign wealth fund, the world's largest, returned about $110 billion or 9.4% in the first half of the year, as gains in equities outweighed losses in bonds—but inflation is posing the largest threat to its returns. The fund, which invests Norway's oil wealth, has also been grappling with how to shift its portfolio to reflect companies with strong ESG records, and started investing in renewable infrastructure earlier this year. Bloomberg

Didi rift

A rift is growing on Didi's board over exactly how much the company ignored the Chinese government's warnings when it decided to list in New York, rather than in China. Members of the board, who include the president of Tencent and the CEO and Chairman of Alibaba, were reportedly furious to learn after the fact that the company was in trouble with the government's cyberspace regulator. The Chinese tech industry is already stuck in the middle of a high-stakes regulatory crackdown. WSJ

Walmart's e-commerce future

Walmart says its digital e-commerce business could be as large as $75 billion this year, giving its first clear forecast of how its efforts to gain ground against Amazon have fared. But after a huge jump last year, the growth in that business has actually slowed, while in-store shopping has grown once again. Meanwhile, Walmart finds itself in the middle of a vaccine debate: it requires its office workers to get vaccinated, but not its in store employees—or customers. Fortune


Oldest—and worst? 

Italy's Banca Monte dei Paschi di Siena is the world's oldest bank. It's also, according to stress tests conducted by European financial regulators, potentially the continent's weakest. Faced with the bank's fading and scandal-plagued legacy, Italy's UniCredit has said it will take over the bank: as long as Rome keeps all its bad loans. Perhaps one thing that has saved the bank for so long: its deep roots in the culture and Renaissance history of Siena. NYT

Delta's odds

Macau's casinos are eyeing up Delta's odds—and deciding the virus might win (at least for a while.) Several of the Chinese gambling mecca's biggest casinos are offering employees redundancy packages. Much of the slowdown lies with travel restrictions: only travelers from Hong Kong, Taiwan and Mainland China can even enter the island—and many of those tourists would be required to quarantine for two weeks. Fortune

An 'unloved' stock market

There was hope that London's stock market could bounce back this year. But while the FTSE is up—by 10%—in 2021, it's underperforming both the S&P and its European rivals, particularly in Amsterdam and Paris. One of the causes of its "unloved" status, Adrian Croft writes, is its relative lack of big tech listings—but investors are truly baffled that some stocks seem to trade at a discount simply because they're in London. Fortune

Laundry stress

Short of quarters? You're not alone. The shift to digital payments—and the decline of cash in circulation—since the pandemic began has produced a desperate shortage of coins for those few activities that still require small change, laundry among them. WSJ

This edition of CEO Daily was edited by Katherine Dunn. 

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