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“Stakeholder Capitalism?” Creating Shareholder Value through Stakeholder Engagement

At the end of the summer the Business Roundtable (BRT) – the 45-year old influential association of chief executive officers of America’s leading companies representing more than $7 trillion in annual revenue (a third of the GDP of the U.S.) – released a major statement signed by 181 CEOs across all industries on their new view on the purpose of the modern corporation. The statement read in part (full version and press release here):

Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth.

While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:

  • Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
  • Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
  • Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
  • Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
  • Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.

Sound familiar? For the public affairs function, this statement resonates with what the profession has been championing for more than a decade – that stakeholders are critical – and as 181 CEOs state – “essential” to the economic value of an organization.

This broader, more holistic notion of value is certainly not new in the world of business.  Whether it is the “triple-bottom line” coined in the 1990’s which added social and environmental factors to the overall assessment of a company and introduced a new wave of CSR and SRI driven corporate behavior, or the more metric driven concepts of ESG (environment, social, and governance) and “long-term value” frameworks that are transforming the finance and investment industry, business leaders and boardrooms have looked at value through different lenses in the pursuit of creating economic opportunity.

What is significant here in the BRT statement, though, is the inflection point shift from the primacy of “shareholder capitalism” to an emerging form of “stakeholder capitalism” that recognizes the broader importance of corporations in society and their impact – and value dependence – on its stakeholders.

This new BRT position has not been without controversy and criticism, but the fact this statement represents a consensus view of the CEOs of the world’s largest companies is noteworthy and welcome news – as well as validation – for public affairs executives who have been fighting for resources and a “place at the table” to be a part of corporate strategy development and value creation through stakeholder engagement. It is also an opportunity for internal re-engagement with the C-suite on assessing an organization’s stakeholders and their importance to company value, an area which has been of growing concern.

In what is now a well-thumbed McKinsey survey on public affairs from 2016, only 17% of C-suite executives felt their companies are “effective at outlining stakeholders  broad objectives and interests,” and a 2013 McKinsey survey found that only 30% of C-suite executives believed their external-affairs capabilities had the proper organizational set-up to succeed. Now is the time to move the needle on those survey results.

So let’s start with what and who are stakeholders to a business? The 2005 Handbook of Public Affairs defines a stakeholder as “…. individual or group who can effect or is affected by the actions, decisions, policies, practices or goals of the organization.” Putting that definition in value-based terms we can say that stakeholders are indeed a form capital that is fundamental to corporate strategy, growth, and success in any market.  And while the BRT statement lists customers, employees, suppliers, communities, and shareholders as stakeholders, we can look at this list much more broadly as an ecology of interacting components with the company at the center:


Government and regulators are increasingly a significant and critical component in this ecology.  Today, policy and regulatory decisions are market forces unto themselves, having the power to shape and disrupt entire industries that rely on new technologies (e.g. mobility, energy, AI) and business models (e.g. “gig economy”).  As the referenced McKinsey surveys have also noted, no other stakeholder other than customers has more of a significant impact on the economic value of an organization.  This is particularly true in international markets where an organization is seen as a foreign investor and more susceptible to policy risk.  All of this further emphasizes the business importance of the public affairs function.

The BRT statement is less than one-month old, but it will certainly influence and shape how businesses think about value protection and creation, and how they identify, engage, and manage their stakeholders.  Effectively engaging in this new environment of “stakeholder capitalism” will likely be a strategic imperative to how businesses operate, and it will be the task an organization’s public affairs function to help guide them forward.

Contact us to find out how your organization can manage its stakeholders to drive organizational value.