Stakeholder Capitalism and the Tree on the golf course

In my last post, I ruminated why the collective’s worldview defines corporate purpose. Thus I pose the question: Should we care about more than just our shareholders, and thus focus on profits and cash-flow only? Really?

Just for fun, let’s find out what the literati of the business world think.

In 1970, the inaugural European Management Symposium was held in Davos, with the idea that companies should be mindful of far more than the bottom line. At that time, this was a fairly novel concept. The event evolved into the annual World Economic Forum (WEF) annual meeting established with the idea that businesses should serve society as a whole, in addition to shareholders – thus giving birth to the “stakeholder concept”. This was memorialized in 1973 in the Davos Manifesto.

Fifty years later, the updated Davos Manifesto 2020 came about after a changing world and evolving expectations. Stakeholder capitalism is mainstreaming and activist investors are becoming more influential. The fifty years since the first Davos Manifesto has seen major shifts in global business and trends, including the rising influence of technology, prominence of multinationals from developing nations, an expansion of global talent pool and unfortunately, a rise in income inequality and wealth disparity. Thus, social enterprises and innovation has come to the fore especially in the past decade, seeking positive impact on environmental and social concerns.

The WEF’s International Business Council (IBC) has been doing the actual heavy lifting of the rebalancing of corporate purpose work. “In 2017, the IBC spearheaded a commitment from more than 140 CEOs to align their corporate values and strategies with the UN’s Sustainable Development Goals (SDGs) to better serve society. There is an emerging consensus among companies that long-term value is most effectively created by serving the interests of all stakeholders.” (Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation, WEF White Paper, A Collaboration between Deloitte, EY, KPMG & PWC ,September 2020)

Before leaving you, I ask you to ponder this photo I took recently of a tree with its many symbiotic partners, and consider its stakeholders. In my next post, I will definitely talk more about this tree.

Location: Kuala Lumpur, Federal Territory of Kuala Lumpur, Malaysia

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