Stakeholder Capitalism

Stakeholder capitalism is a business model that prioritizes the interests of all stakeholders over solely maximizing shareholder profits.

I personally like to think about it as, the purpose of a business is just a vehicle to connect stakeholders. If there is a broken road, a business exists to allow those who want to fix it, to take action and fix it while being paid, allowing those who want to invest in the road to pay for it, to do so, and allowing those who want to use the road to benefit from it.

An example of maximizing stakeholder value looks like:

• Employees: Ensuring fair wages and safe working conditions.
• Customers: Providing quality products and services.
• Suppliers: Maintaining fair and ethical sourcing practices.
• Communities: Investing in local development and sustainability efforts.
• Shareholders: While still important, their interests are balanced with those of other stakeholders.

Counterpoint

During CEL, I brought this up to a finance professor, and the response was really insightful.

I said that, stakeholder capitalism might even just be an extension of shareholder capitalism. That is, some shareholders do want to see sustainable practices, want to treat people well, etc.

And he said, with the exception of B Corporations, yes there are some shareholders that will want to treat people well, some that will want to help climate change. But.. the only common line between these shareholders is maximizing profit. And then we leave it to the shareholders to then spend their money on whatever they want to help society.