The future of our economy and the livelihood of all Americans depend on corporate leaders doing the right thing. That means looking after all of their stakeholders, not just shareholders.
This transformational shift toward a more balanced form of capitalism is under way. In fact, at the 2020 World Economic Forum in Davos, stakeholder capitalism emerged as an urgent charge for business leaders. The need for companies to invest in their workers, take care of customers, support their communities, and protect the planet has never been more pronounced.
When it comes to turning words into action, certain CEOs have taken a lead in confronting some of the key issues their stakeholders face today. Here are a few notable examples — broken down by stakeholder — that any leader can learn from.
Stakeholder #1: Workers
In our annual survey, Americans told us that fair pay and work-life balance are among their top priorities, and certain CEOs are taking a lead on those concerns.
PayPal CEO Dan Schulman has spearheaded fair and equitable pay practices to ensure that even lower-wage workers feel financially secure. PayPal performed an audit of its hourly workers and call center employees and found that 60% struggled to pay their bills at the end of month. In response, the company committed to raising the basic wages of the most affected workers, while also reducing the cost of healthcare for those workers by an average of about 60%.
“For me, paying equally is table stakes to attract the very best, diverse workforce inside PayPal.… Every company should do this,” Schulman said during our Quarterly JUST Call with PayPal late last year.
Dr. Tom Leighton, CEO of Akamai Technologies, has prioritized providing his company’s employees with a supportive workplace environment, offering an unlimited PTO policy and providing new parents with up to 18 weeks of paid leave.
Not only do employees benefit from these perks, but they help the company retain top talent — a challenge in the competitive tech industry.
Stakeholder #2: Customers
When it comes to taking care of customers, companies need to consider product safety, data privacy, and fair pricing — all things the American public deemed important.
Apple CEO Tim Cook has been vocal about the need for companies to safeguard the privacy of their users, in a time when customer data mining and sharing is rampant. Beyond committing to strong customer privacy protections at Apple, he’s called on Congress to pass comprehensive federal privacy legislation.
Moreover, the company has integrated numerous privacy protections into its consumer technologies, such as Intelligent Tracking Protection, which reduces advertisers’ ability to track people’s movements on Apple’s Safari browser.
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Stakeholder #3: The Environment
Certain industries, including technology, have a disproportionately detrimental impact on the environment through their manufacturing operations, their packaging and logistics, and the energy consumption of their products.
Aneel Bhusri, CEO and co-founder of Workday — which ranks first in our 2020 Rankings for their environment practices — has set and achieved aggressive renewable energy goals. In 2018, the company signed the first-ever renewable energy aggregation deal with four other large companies, and in 2019, it reached its goal of using 100% renewable electricity. Bhusri says the company continues to work toward zero carbon emissions by 2021.
Hewlett Packard Enterprise, led by CEO Antonio Neri, is also developing forward-thinking practices when it comes to reducing energy consumption. The company’s labs are developing new types of system architecture that will greatly reduce the energy consumed by supercomputers and data centers.
Neri has also discussed how Hewlett Packard holds its huge supplier base to the same environmental standards and targets it has for itself, helping to drive change through its supply chain. And last year, the company committed to lowering its global greenhouse gas emissions by 60% by 2025.
“With a very large supply base, we have to make sure they operate and act with the same mindset, with the same targets,” Neri shared during our Quarterly JUST Call in January. “And then we have to make sure they deliver against those targets. So that is probably the biggest challenge, because it takes an enormous amount of effort to make sure we have the right systems in place to measure everything.”
Stakeholder #4: Communities
Companies and their leaders are in a unique position to affect the economic opportunities and livelihood of their local communities, further helping the people who work for them.
Dr. Leighton of Akamai Technologies has championed providing significant work training and income opportunities among Akamai’s local region. The company’s Akamai Technical Academy, for example, provides a paid five-week training program for women, ethnic minorities, and veterans in its Cambridge, Massachusetts, headquarters who are looking to build a career in technology but may not have a technical background.
The company benefits, too, because the trainees get jobs at Akamai, helping to bolster the diversity of its own workforce.
UPS CEO David Abney is another executive who has advanced his company’s legacy for community investment. Under Abney’s leadership, the company has not only increased its commitment to diversity and inclusion in the workplace but also to increasing diversity among its suppliers. Between 2017 and 2018, the company increased its spending on diverse suppliers by 250%.
Stakeholder #5: Shareholders
Even though U.S. corporations have a reputation for putting their shareholders’ concerns first, some leaders are finding new ways to engage them in their stakeholder capitalism objectives — and, in turn, drive greater shareholder returns.
Hewlett Packard’s Neri, for example, has made stakeholder issues and the discussion of how focusing on them will improve HPE’s long-term value a front-and-center conversation with its shareholders.
“Environmental, Social, Governance — including inclusion, diversity, sustainability, and so forth — definitely are becoming way more important than ever before,” he says.
We know from our work to expand just business practices and stakeholder capitalism among U.S. companies that CEOs are a driving force. These leaders are pioneers in creating and promoting practices that increase stakeholder impact and ultimately increase shareholder return.
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