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Microsoft CEO Satya Nadella Shares What He’s Learned About Stakeholder Capitalism As the Head of America’s Most JUST Company

Microsoft CEO Satya Nadella. (Microsoft)

This year, we released the 2021 Rankings of America’s Most JUST Companies on October 14, and for the third year running, Microsoft took the lead. At the Forbes JUST 100 Virtual Summit, JUST Board Member and CEO of Grameen America, Andrea Jung, sat down with Microsoft CEO Satya Nadella to discuss his leadership. Nadella is one of the most prominent proponents of adopting stakeholder capitalism, and he explained how to make that a reality in light of COVID-19, our national reckoning with racial injustice, and recent challenges to American democracy.

On navigating the extraordinary challenges of 2020, Nadella began by saying that Microsoft’s three-time No. 1 rank in the JUST 100 is “really the recognition of all the people I work with, my team members and coworkers, and their hard work every day, living our mission and our culture.” It’s this commitment to mission, culture, and purpose that Nadella credits with Microsoft’s competitive advantage, and it’s something he has been fostering in his seven years as CEO, as well as his 28 years at the company.

Watch the full talk here and explore our key takeaways below.

2020 showed that we need to have a referendum on capitalism

Stakeholder capitalism has faced criticism for being little more than rhetoric, a buzzword for corporations looking to align themselves with ideals of sustainability and ESG. But in the conversation, Nadella pushed back, emphasizing that “in the midst of this pandemic, [it’s fair to] to essentially have a referendum on capitalism. We all have to recognize: What is the core purpose of a corporation?” Rather than simply generating a profit for shareholders, Nadella believes that this purpose must lie in finding profitable solutions to the issues faced by people and our planet, and that the measure of corporate success lies not in the surplus companies create in their own enterprise, but in the surplus they create around them. Microsoft’s long-time commitment to these ideals, and its ability to execute its social mission, are key to its competitive advantage in our Rankings, and as evidenced by the company’s best quarter ever.

Protecting the environment is at the heart of the stakeholder approach

Microsoft has consistently been a leader in the arena of environmental impact and sustainability, pioneering new technologies and initiatives that reduce its footprint. Recently, Microsoft announced that it aimed to be carbon negative by 2030 and that by 2050, the company will essentially “go back in time” to reclaim all the carbon it had emitted since 1975. Nadella recognizes that of course climate change is a global issue that a single company can;t solve, but believes that these ambitious efforts can create a “ripple effect through our ecosystem of suppliers and partners,” driving powerful change across its operations.

America’s economy depends on America’s democracy

In the midst of a contested election, Americans are looking to companies – and particularly those in the tech sector – to play a critical role in protecting democracy. Nadella agrees, emphasizing that “as an American company and as a tech company, our standing in the world and in the U.S. comes because of the vibrancy of American democracy.” With technology both a powerful tool and pervasive challenge of American society today, Nadella sees a “wide gamut” of efforts that Microsoft can make to help ensure that democracy continues to thrive, from making the democratic process itself more secure to protecting the digital discourse around key issues like racial injustice. With the foundations of our democratic system at stake, leaders like Nadella are poised now, perhaps more than ever, to play a key role in their protection.

Shareholders want stakeholder capitalism

In the debate around stakeholder capitalism, a pervasive myth holds strong among corporate and investment leaders that doing right by workers, communities, customers, and the environment hurts shareholder returns. Throughout the COVID-19 crisis, Microsoft continued to pay its employees and contractors, despite pandemic constraints like the closure of its corporate campus. Nadella shared that decisions like these, in support of the company’s stakeholders, stem from Microsoft’s long-term mission and principles to create success around itself, something the company’s shareholders have a vested interest in. He shared that “our shareholders want us to do this,” driving home that his company’s competitive advantage – its success in the long term and the value it creates for shareholders – is derived from its commitment to all its stakeholders.

In challenging times, decisions must remain grounded in purpose

In this unprecedented moment, corporate leaders are faced with urgent questions around how to lead their companies – through the pandemic, social unrest, and political tumult – and what, in turn, that means for society. Jung asked Nadella what he believes his personal responsibility is to lead in this moment. “I always go back to that social contract of our company with the world around us. Because that to me is at the core of the license to operate,” he said. “You can’t exist if all you’re doing is benefiting yourself. … Profit [comes] because of the larger surplus you’re creating around you.”

With our country and our world facing profound new challenges, this sense of purpose must continue to fuel not only what corporate leaders say on the issues that matter most, but how they act. Nadella emphasized that, by holding fast to culture and purpose through this time of upheaval, corporate leaders can help ensure greater resiliency and a better future for Americans, as well as continued success for their companies.

You can watch the full JUST 100 Virtual Summit here.

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