The 2022 Edelman Trust Barometer and BlackRock CEO Larry Fink’s annual CEO letter, both released Monday, are essential reading and together echo everything we at JUST know to be true: That corporate success today depends on how much value you create for all your stakeholders, not just your shareholders; that prerequisites for such value creation are engagement, accountability, transparency, and trust; and that business can and should do more on our most intractable challenges – inequality, social mobility, health and wellbeing, climate change – not out of some sort of political social agenda, but out of enlightened self-interest.
Early in Fink’s letter he writes, “Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.”
We agree: It is not “woke” to pay people fairly. It isn’t woke to provide good jobs, good benefits, and good training. And it certainly isn’t woke to want businesses to give back to the communities where they operate, to promote better health, or to provide pathways to opportunity for every American regardless of color, gender, or creed. It’s just better business.
This notion of a better form of capitalism presents a powerful force that seven years of polling all around the country has made plain the vast majority of Americans support.
It also represents that most elusive of things: a shared vision that unites more than it divides.
This is something we desperately need. The “vicious cycle of distrust around the world, fueled by government and media” that Edelman highlights in its report represents a five-alarm fire for democracy and free market enterprise.
It is reflective of a society addicted to what Richard Edelman calls a “junk-food” diet of social media and fake news, mistrustful of pretty much any information that doesn’t support existing beliefs, and struggling in a vortex of cynicism, division, and political dysfunction.
Breaking the death grip of mistrust is surely the defining challenge of our generation.
In Peter Goodman’s “Davos Man,” the problem lies with the likes of Salesforce CEO Marc Benioff, corporatist elites, billionaire philanthropists, and stakeholder capitalism. “What capitalism lacks is an inherent mechanism that justly distributes gains,” he notes in a piece adapted from his book. To Goodman, and like-minded writers before him, the answer presumably lies in some form of tax system overhaul and greater government intervention.
It is true that government has a role to play, and that people want more corporations to pay their fair share of taxes – we’ve seen this in our polling. It is also true that the pandemic has accelerated already-vast wealth disparities and other inequities in the U.S. and around the world. However, the Edelman findings, like our own, suggest that it is to business, not government, that most Americans turn when they think about how to create a better future for themselves, for their communities, and for the planet.
For one thing, nearly half of Edelman’s respondents view government as a divisive force in society. “My Employer” and “Business” are both significantly more trusted than government. Moreover, Edelman says, “We now see business as the stabilizing force delivering tangible action and results on society’s most critical issues.”
The key to all this is accountability. For the market to truly hold corporations to account for their performance on stakeholder value creation, it must have a way to gauge performance accurately and openly. It must be able to evaluate whether companies are doing what they say they’re doing, to trust in the information being provided, and to act upon it. In true stakeholder capitalism, the mechanism for the just distribution of gains becomes the market itself.
Workers, consumers, investors, and communities hold more power than ever before to push companies towards greater stakeholder value creation. The good news is that this has never been more aligned with business success and shareholder returns. Through the vision of Messrs Benioff and Fink, and the hard work of their employees, both Salesforce and BlackRock are named in our 2022 JUST 100 Rankings for doing exactly this. They and others working to shift capitalism onto a more just, stakeholder-oriented trajectory should be recognized for their leadership, not attacked.
Placing trust, data, and accountability at the center of the stakeholder model offers a viable path forward anchored in action over rhetoric, and tangible solutions over perpetual struggle. It will also build a virtuous cycle of trust that puts the country on a better path forward.
(Editor’s Note: Martin is a senior adviser to Edelman Impact.)