What does ‘stakeholder capitalism’ mean? Why should companies be accountable for their impacts on society and the environment, and not only the interests of investors?
These key issues are addressed in Towards stakeholder capitalism: how we can get there, the second instalment of ‘The GRI Perspective’. This new regular series dives under the surface of topical themes in the world of sustainability reporting.
The paper reflects on an annual letter to CEOs from Larry Fink, CEO of BlackRock, where he called for companies to “create value for and be valued by its full range of stakeholders”.
Insights from The GRI Perspective include
There is a continuing perception shift in business culture – from value creation that benefits shareholders alone towards one that takes account of a broader set of stakeholders, encompassing social engagement and environmental impact.
Explaining how their actions seek not only to be profitable, but also to safeguard stake holder interests, is a powerful tool to demonstrate their contribution to people and planet.
A stakeholder-centric corporate strategy’s benefits, enhance reputations and brands, improve ability to hire new staff, mitigate environmental risks and increases access to capital markets.
Shareholder capitalism without reporting on the impacts of sustainability issues on value creation makes little sense. Stakeholder capitalism, meanwhile, without sustainability reporting that reflects the needs of society and the environment makes no sense either.
Achieving socio-economic and environmental cohesion demands a wider perspective than climate metrics or investor interests alone: this is where GRI’s world-leading, multi-stakeholder sustainability reporting standards come into play, alongside financial disclosure.
The GRI Perspective on sustainability
Peter Paul van de Wijs, GRI’s Chief External Affairs Officer said, “As Larry Fink stated last month that stakeholder capitalism is not woke but capitalism and at GRI we are in firm agreement.”
“Failing to endorse sustainability reporting that meets the needs of a multitude of stakeholders falls short of the societal expectations of true stakeholder capitalism.”
“We understand that businesses need to be profitable, and that doing so in a way that does not conflict with their obligations to people and the climate can be challenging.”
“At the same time, understanding and managing sustainability risks is a prerequisite when responding to the transparency needs of stakeholders, which include investors.”
“That’s why corporate reporting needs to fully reflect impacts on the economy, environmental and society, as enabled by the GRI Standards.”
“We believe the best way that this can be achieved is by moving to a comprehensive, two-pillar reporting system with financial and sustainability disclosure on an equal footing.”