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Can The Stakeholder Model Give American Business a Global Competitive Advantage?  

(John Moore/Getty Images)

Someone asked me a great question during a presentation earlier this week: “How can the stakeholder model lend American corporations a competitive advantage on the world stage?”

The more I ponder this, the more I realize it is in fact a defining proposition.

Most obviously, it speaks to the fact that solving major societal challenges – climate change, say, or a global pandemic – is a massive business opportunity that can drive top line growth. If American businesses lead the world in clean power (as noted in our Quarterly JUST Call with American Electric Power’s CEO) or COVID-19 vaccine production, the value creation for both shareholders and stakeholders alike is immense.

But it also speaks to business philosophy, and the belief that investing in workers, supporting local communities, creating good jobs, prioritizing inclusive work cultures – all the things we hear via our public opinion research – can lend companies a sustainable edge versus their global competitors. Our Worker Financial Wellness Initiative, for example, is a growing coalition of businesses, and Chobani joined PayPal as an anchor partner last week. These organizations believe that supporting workers experiencing financial hardship isn’t just the right thing to do, it’s also driving lasting commercial success and strengthening American democracy.

Finally, the question provokes an important discussion about the ways in which governments can promote national competitive advantage by incentivizing businesses to invest in their stakeholders. Getting this right is not easy. Former Best Buy CEO and JUST advisor Hubert Joly talked this week to our editorial director, Rich Feloni, about his new book, “The Heart of Business,” and noted the dangers of overburdening companies with too much bureaucracy. Regarding incoming ESG reporting standards, he said that “the general idea of a broader set of metrics is good, but the danger is to create unnecessary and irrelevant complexity.”

Proponents of the stakeholder model must take an international perspective to see its full potential. As Harvard Business School professor Rebecca Henderson told us, “If the U.S. could combine its agility and ability to innovate with a deep investment in high road business models, we would be unstoppable.”

Be well,
Martin Whittaker

This Week in Stakeholder Capitalism

Activision-Blizzard’s CEO is taking a 50% pay cut to his base salary and bonuses after shareholders complained about his pay being too high.

Business Roundtable teams with the U.S. Chamber of Commerce to create a Global Pandemic Response to help India’s escalating coronavirus crisis. Immediately on the agenda? Delivering 1K ventilators and 25K oxygen concentrators.

Goldman Sachs asks employees to return to the office on June 14th, making them one of the first Wall Street firms to push for a return to in-office work.

Citigroup, Vanguard, and several other financial companies are embracing a hybrid work model.

Live Nation’s CEO is under fire for quietly bringing back his salary less than two months after saying in April 2020 he would take no pay to deal with losses due to COVID-19.

JUST Events

Today at 12:15PM ET: Register for Just Brands ‘21 to hear our Senior Director of Research, Kavya Vaghul, sharing insights from our Corporate Racial Equity Tracker.

Tuesday, May 11th at 4:00PM ET: How are business leaders grappling with America’s racial injustice reckoning? What can CEOs do to center racial equity and justice within their companies, communities, and society? Join PolicyLink President and CEO Michael McAfee, Ben & Jerry’s co-founders Ben Cohen and Jerry Greenfield, and former Patagonia CEO Rose Marcario to discuss the courageous business leadership we need today to build an equitable nation for all of us. Register here.

On May 13th, Catalina Caro joins a panel previewing our upcoming Blueprint for Racial Equity 2.0with members of FSG, PolicyLink, Rhino Foods, and Lorraine Wilson discusses the ins-and-outs of designing a racial equity investment portfolio with Natixis. Then on May 17th, Alison Omens joins US SIF and The Aspen Institute for a conversation on leadership and policy opportunities for a more sustainable economy for the next 100 days of the Biden administration.


What’s Happening at JUST

Our Worker Financial Wellness Initiative partner, PayPal’s CEO Dan Schulman, was profiled in conversation with Chobani CEO Hamdi Ulukaya in Barron’s discussing why Ulukaya was inspired to join the Initiative and assess his employees’ financial health and well-being. We’re biased, but it’s a great read!

The Financial Times looks at whether or not CEOs are living up to their promises after George Floyd’s murder, featuring our Corporate Racial Equity Tracker; GreenBiz also includes a mention of the Tracker in its roundup of “whats on the menu” this proxy season, and Martin was quoted in an Insider feature that polled 614 business decision-makers on rising expectations around ESG, data, and accountability.

Three academic researchers – Rebecca Lester from Stanford Graduate School of Business, Ethan Rouen from Harvard Business School, Braden Williams from University of Texas at Austin – received a shout out from Alan Murray in CEO Daily this week for their new paper showing how companies that have demonstrated a commitment to their workers (measured through JUST Capital’s Workers’ scores), took better care of their employees when times got tough during the first few months of the pandemic. You can read more here and download the study here.

The Forum

(Financial Health Network) 

“It’s really important to set appropriate metrics that are within the control of the business and then make sure that you’re making progress over time. It’s what CEOs do in every other part of their business. Why should, the way they manage their employees and the expense of their employees be any different?”

“You see people in the plant happy, but you don’t know what happens when they go back home. What’s the condition of the home? What’s the condition of the people who live in that house with their children? What’s the condition of retirement thinking? Those conditions really affect how they are in the factory.”

  • Hamdi Ulukaya, CEO of Chobani, on why he is assessing his employees’ financial well-being in Barron’s.

The legal document says explicitly that our duty is to the financial shareholders, but the truth of the matter, now recognized by the Business Roundtable and elsewhere, is that the world has changed. … And people do feel like corporations, because of their size, because of their scale and imports, they have a bigger role to play. It’s also the asset owners – the pension funds and insurance companies. This is our money that we put to work. We want to see better outcomes in society.

Must-Reads of the Week

The Washington Post chronicles how “the two Kens” – Kenneth Chenault, former head of American Express, and Ken Frazier, head of Merck –  created a movement over the last two months to get major corporations to take action on voting rights.

The New York Times reports on two new coalitions of companies – including HP, Microsoft, Unilever, Salesforce, and Patagonia – calling for expanded voting access in Texas, wading into the debate over proposed new restrictions.

Forbes reports that several prominent business leaders are teaming up on a coalition to tackle AAPI hate with a $250 million campaign over the next 5 years.

Reuters reports that the Biden administration blocked a Trump-era rule that would have made it easier to classify gig workers as independent contractors instead of employees, signaling a potential policy shift toward greater worker protections.

Quartz shows why pandemic aid actually led to the biggest jump in middle-class disposable income ever.

Chart of the Week


Our latest chart of the week looks at new research from S&P Global on the rise of Sustainability-Linked Bonds, and how they are a unique win-win opportunity for companies to show quantifiable progress toward the S in their ESG goals.

Have questions about our research and rankings?  We want to hear from you!