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Centre for Corporate Governance (CCG), London Business School and the Investor Forum (2022): “What does stakeholder capitalism mean for investors?”
In 2021 CCG and the Investor Forum embarked on a collaborative project to examine how investors can best evaluate and assess stakeholder issues, while fulfilling their client mandates and fiduciary duty.
Proponents of a growing body of opinion assert that the current model of capitalism has failed because of an excessive focus on shareholder interests without sufficient regard to other stakeholders. They advocate for an alternative form of capitalism – stakeholder capitalism.
- a systematic approach to review, prioritise and respond to stakeholder issues; and
- client mandates that align interests and make it clear when and how investors will act on those issues.
-the impact should be ‘material’ in its widest sense, which could extend well beyond financial materiality;
-there should be a reasonable prospect that investor action can be effective; and
- the investor should be well placed to act relative to other parties.
Matos (2020): “ESG and Responsible Institutional Investing Around the World: A Critical Review”
CFA Institute Research Foundation Literature Review
Edmans (2012): “The Link Between Job Satisfaction and Firm Value, With Implications For Corporate Social Responsibility”
Academy of Management Perspectives
Dimson, Karakas, and Li (2016): "Active Ownership"
Review of Financial Studies
Bebchuk and Tallarita (2020):"The Illusory Promise of Stakeholder Governance" Cornell Law Review
Lins, Servaes and Tamayo (2017): “Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility during the Financial Crisis”
Journal of Finance
Eccles, Ioannou, and Serafeim (2015): “The Impact of Corporate Sustainability On Organizational Processes and Performance”
Krüger (2014): “Corporate Goodness and Shareholder Wealth”
Journal of Financial Economics
Flammer and Kacperczyk (2016): “The Impact of Stakeholder Orientation On Innovation: Evidence From a Natural Experiment”
Denis (2019): "The Case for Maximizing Long‐Run Shareholder Value" Journal of Applied Corporate Finance
Responsible Business podcast series
The Responsible Business podcast series looks at how business leaders – from start-up social enterprises to large corporations – embed responsibility into the heart of business so that it’s more than just a mission statement. It tackles some of the thorny issues in responsible business, such as how to navigate trade-offs and obtain buy-in from investors and all employees.
Grow the Pie podcast series
Tom Gosling and Alex Edmans host the Grow the Pie podcast series examining how companies can serve society while also generating profit for investors. They explore themes from Alex's book ''Grow the Pie: How Great Companies Deliver Both Purpose and Profit'', but digging into greater detail on the practical challenges to putting purpose into practice and how we can use evidence to guide us.
How to Give Shareholders a Say in Corporate Social Responsibility (Alex Edmans and Tom Gosling)- If companies are going to pursue goals beyond profits, investors should be allowed to weigh in. Alex and Tom propose that investors are given a "say-on-purpose" vote.
What Stakeholder Capitalism Can Learn From Milton Friedman (Alex Edmans)- Why the Friedman doctrine stresses that companies should invest in their stakeholders, contrary to popular belief, and the practical lessons it provides for responsible business and responsible investment
What Stakeholder Capitalism Can Learn From Jensen and Meckling (Alex Edmans)- Why advocates of stakeholder capitalism should take a fresh look at Jensen and Meckling’s seminal 1976 paper on agency theory
How Great Companies Deliver Both Purpose and Profit (Alex Edmans)- The idea that business must sacrifice profits to do good must be turned on its head
Don’t shed too many tears for Emmanuel Faber (Tom Gosling)- What the ousting of Danone's purpose-driven CEO means for the concept of responsible business
Getting to the heart of the case for diversity (Tom Gosling)- Overstating the business case for diversity understates the change we need to make
Q&A on Responsible Business in a Time of Crisis (Alex Edmans and Tom Gosling)
- Responses to audience Q&A from the webinar Responsible Business in a Time of Crisis, on the difficult trade-offs that companies face when implementing responsibility
Climate Change Blog (Tom Gosling)-Series examining personal approaches to decarbonisation
It’s not (just) what you spend, it’s the way that you spend it
'Evaluating Research' (Alex Edmans)
The Dangers of Sustainability Metrics (Alex Edmans)- Why sustainability is inherently subjective and metrics should be interpreted with caution
E.ON’s Chief on Quitting Carbon by 2050 (Tom Gosling)- Insights from E.ON's UK CEO on the firm's switch from coal power to renewables, motivations for making the change, and the trade-offs involved
Transforming Culture in Financial Services – Driving Purposeful Cultures (Financial Conduct Authority)- FCA discussion paper with collection of essays exploring the role of purpose in driving a healthy, sustainable culture
From Profit to Purpose and Back Again (Tom Gosling)
- Essay exploring the benefits of a purposeful approach to financial services and how firms can become purpose-led, pp. 43-45
ESG Is Important – Especially To You, Fund Managers (Ben Yeoh)- Why traditional fund managers should take into account ESG factors
Corporate Governance Green Paper is a Call To Arms (Clare Chapman and Alex Edmans)- How companies can translate purpose from a statement to a practice
Why Purpose is Key to Success in Twenty-First Century Business (Alex Edmans)- The importance of purpose in the modern firm, and why it is not just an optional extra
Does Socially Responsible Investing Make Financial Sense? (Alex Edmans and David Vogel)- The case for and against Socially Responsible Investing
28 Years of Stock Market Data Shows a Link Between Employee Satisfaction and Long-Term Value (Alex Edmans)- Employee satisfaction is linked to long-term shareholder returns, and causality is likely from the former to the latter