The Stakeholder Capitalism Imperative
The recent World Economic Forum’s Davos Agenda confirmed what we have been seeing as clear trend line: there is increasing importance of the role business takes in addressing societal challenges. As trust in government continues to wane — especially in relation to the pandemic response — business is emerging as a (relatively more) trusted force to address complex and interrelated crises: from a global pandemic to calls to “build back better” with a more inclusive economic recovery to advancing greater diversity, equity and inclusion (DE&I) within companies and society. And, business leaders have remained active in addressing the climate crisis even when the U.S. government pulled away from the Paris Climate Accords.
What we’re seeing is an understand that sustainability requires a holistic approach, addressing environmental concerns, community needs and business objectives. The management concept that is gaining the most traction is Stakeholder Capitalism.
The Capitol Hill Riots: An Object Lesson
We witnessed an object lesson on Stakeholder Capitalism in the hours and days following a violent riot at the U.S. Capitol on January 6, 2021. The business community acted swiftly to condemn the mob and those in power who perpetuated a false narrative about the 2020 election, including the President and members of Congress. Groups as varied as the U.S. Chamber of Commerce, the National Association of Manufacturers and the Business Roundtable joined a swell of individual companies in a common response. Many companies moved beyond statements of condemnation by suspending political contributions. The Atlantic called this a “private sector impeachment.”
The reactions to the Capitol Hill riot are a continuation of general trends in corporate activism. CEOs and other executives are under greater pressure to speak up on societal issues important to employees, customers and communities where they operate, especially when it is authentic to the leader, aligned with corporate values, and the right thing to do for the company and its stakeholders — including society at large.
When, Where and Why Companies Can Act on Policy Issues
While every company must align on the specific issues that are material to its business, there are several
themes that will dominate the stakeholder capitalism conversation this year. We advise companies to reflect on key questions, mapping how their purpose strategy and core commitments align with and help solve macro societal challenges:
- CLIMATE CHANGE: how is your company promoting carbon neutrality, environmental justice and end-to-end supply chain sustainability
- INCLUSIVE CAPITALISM: how is your company helping to address income and wealth inequality, promote equal access to opportunity and enact inclusive wage, diversity and labor practices?
- ESG TRANSPARENCY: is your company prepared to respond to activist investors and new exchange rules that may mandate ESG disclosures and reporting?
- DISINFORMATION: how is your company ensuring it does not contribute to the spread of disinformation in communications, advertising and political and philanthropic giving?
- RACIAL EQUITY: how is your company addressing racial equity, first within your board and employee base, as well as demonstrating social progress on commitments or statements made in the wake of racial justice protests?
- LEADERSHIP DIVERSITY: how is your company empowering diversity in the C-suite and at the board level? Are you prepared to respond to activist investors and new exchange rules that may mandate ESG reporting?
Go DEEPER: Check out our sister publication Purpose Decoded to read Five Things to Know About Stakeholder Capitalism where we provide a quick primer on the elements of Stakeholder Capitalism you need to know.
The Communications Imperatives
Here are a few principles to keep in mind when communicating about Stakeholder Capitalism:
- CLEARLY ARTICULATE YOUR AUTHENTIC PURPOSE AND VALUES. Stakeholders want to know what your company stands for and how you are intentionally operating to have sustainable business growth and positive social and environmental impact.
- DEMONSTRATE HOW STAKEHOLDER CAPITALISM INFORMS STRATEGY. Show shareholders how you are mitigating long-term risk and maximizing economic benefit, while driving better outcomes and impact for employees, customers, partners, and communities.
- SHOW EVIDENCE OF PROGRESS AGAINST TANGIBLE GOALS. Transparency is critical for credibility and trust, and stakeholders want to understand not only the impact, but how you are failing forward and the learning journey your company is on to transform your business. Companies must go beyond merely publishing annual reports on their progress.
- BE WILLING TO PARTNER TO ACCELERATE SOLUTIONS. It is more common today to tackle systemic challenges through coalitions working across sectors and industries to demonstrate collective commitments and action, drive innovation and create impact at scale.
- DECIDE IF AND HOW YOU WILL DEMONSTRATE CORPORATE ACTIVISM. Determine how you will engage employees on consequential issues and developments and plan for when it is appropriate to speak out externally, including when to deploy the CEO and align with partners and peers.
You can download this advisory content as a PDF report here.
Edited by Emily Winston
Want to work with us? For inquiries, please reach out to Ellen DeMunter at Edemunter@powelltate.com
About Weber Shandwick Public Affairs
Our global public affairs expert counselors, spanning 25 countries & 36 cities, work with brands to navigate the convergence of government, business, technology and culture. We collaborate with corporate and marketing teams to assess and shape policy issues that drive sales and reputation.
We create impactful, data-driven, breakthrough campaigns that shape the debate, build advocacy and effect change on issues that matter most, from environmental stewardship to access to healthcare to human rights. We also bring political diversity to our work, with global experts coming from the highest levels of government, political campaigns, corporations, media, law firms, NGOs and regulatory agencies.
For more information, visit: https://www.webershandwick.com/expertise/public-affairs/
Our Specialty Public Affairs Unit in Washington D.C. is also known as Powell Tate. For more information, visit: www.powelltate.com
