Stakeholder Capitalism Gets a Report Card. It’s Not Good.

The Business Roundtable presents its mission statement as a reflection of the belief that C.E.O.s face extraordinary pressures to protect workers, the environment and community interests or suffer punishment in the marketplace.

“It was not a demotion of the long-term shareholders, because, in our view, the interests of all the stakeholders align in the long-run success of the enterprise,” said the president of the Business Roundtable, Joshua Bolten. “But it is a rejection of short-term shareholder interests.”

Companies can trigger immediate gains in their stock prices by cutting costs through layoffs or slashing benefits. “But in the long term that’s not going to serve the enterprise well if you haven’t properly taken care of all of your other stakeholders,” Mr. Bolten added. “You cannot take care of any one of them without taking care of them all.”

Yet the recent history of American capitalism is the story of wages stagnating for ordinary workers even as shareholders reap extraordinary gains. The divide has proved especially stark during the pandemic: Shareholders suffered initial plunges in asset values but then recovered; tens of millions of wage-earners remain jobless, massing at food banks.

Mr. Bolten said that picture masks how Business Roundtable members have aided employees during the pandemic, providing help with child care and flexibility to work from home, while boosting philanthropic efforts.

“I think they have done exceptionally well,” he said.

The new study says otherwise. Researchers explored the workings of 800 companies — those whose shares are included in the SP 500 and the FTSEurofirst 300, an index of European stocks — and narrowed the survey to 619 for which they were able to amass at least three years of data.

They mined trade publications, news reports and other industry sources to determine the degree to which companies were operating in accordance with the Sustainability Accounting Standards Board, a nonprofit that promotes corporate standards on social and environmental issues. They examined how the companies performed between June and July on a range of indicators relevant to the pandemic, such as workplace safety, and to racial inclusivity, including the diversity of governing boards.

Article source: https://www.nytimes.com/2020/09/22/business/business-roudtable-stakeholder-capitalism.html