Introduction

Governance professionals report on their board's involvement in exploring stakeholder capitalism issues, investor interest and how companies are reaching out to other stakeholder groups

Introduction

Governance professionals report on their board's involvement
in exploring stakeholder capitalism issues, investor interest and
how companies are reaching out to other stakeholder groups

In 2019, 181 CEOs of major US companies signed the Business Roundtable’s Statement on the purpose of a corporation, issuing a call for companies to look to the interests of not only shareholders but also other stakeholder groups such as customers, employees, suppliers and communities. This overturned a previous policy statement that for more than two decades had defined a company’s principal purpose as maximizing shareholder return.Since then, developments ranging from the need to protect employees during a global pandemic to a heightened focus on racial equity, greater awareness of the climate crisis and supply-chain crises have all ratcheted up discussion about stakeholder capitalism and its current or potential role. Questions remain about the extent to which companies in practice take into consideration the needs and wants of stakeholders other than their shareholders – and indeed whether investors will pressure them to do so.In this special report we present results from a survey conducted among governance professionals such as general counsel, corporate secretaries and their teams. Their responses provide insight into how boards assign oversight of and discuss stakeholder capitalism issues, investor questions about those issues, the extent of formal stakeholder capitalism strategies and whether companies link executive compensation to corporate purpose.Our research indicates that stakeholder capitalism has gained a firm toehold in terms of board discussions, research into stakeholder groups and even directors’ engagement with non-shareholders, but less so in terms of specific strategies and regular investor questioning.

Key findings

Sixty-one percent of respondents say the main board has some oversight of stakeholder capitalism issues.
Overall, just under half (49 percent) have discussions around these issues on an ad hoc basis, while 16 percent do so at every board meeting.
Three quarters of respondents say their company seeks information on the needs of stakeholders other than shareholders.
More than half (53 percent) of respondents at mega-caps say stakeholder capitalism issues are at least very important to their investors, with 18 percent saying they are extremely important.
Only 21 percent of respondents say their company has a defined strategy for stakeholder capitalism. Fifty-eight percent say their company does not, although it should be noted that more than a fifth (21 percent) do not know.
Overall, more than half (51 percent) of respondents say executive compensation is linked to corporate purpose at their company.

Survey demographics
This report is based on the findings from an online survey conducted between December 2021 and February 2022. A total of 153 respondents took part.