The unfinished business of stakeholder capitalism

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Hello.

There is a new book today, The six new operating rules, by Judy Samuelson, who started the Aspen Institute’s Business and Society program in 1998 and remains there today. From this perch, she observed the changing role of society over the past two decades. His book examines the fundamental changes that have taken place as physical assets and financial capital have become less important, and reputation, intellectual property and human capital have become more so.

Like me, she believes these changes have led companies to focus more directly on their impact on society – a change reflected in the Business Roundtable’s statement on stakeholder capitalism last year. “The BRT statement was an important marker. This clarified the intentions.

But yesterday, Samuelson told me that she also believes there are at least three big unfinished business – “blind spots,” she calls them – “that prevent companies” from making their intentions come true. new stakeholders. The three:

Salary of executives.Over the past decade, executive compensation has grown by 7% a year, she says, while declining middle managers have seen only a 3% increase. Why this gap? Because senior executives are paid in stock-related rewards, this reflects returns for shareholders. “As long as Total Shareholder performance is at the heart of how we compensate executives… it’s the antithesis of what the business roundtable said.

Contract workers.At a time when companies are focusing more on the needs of their employees, their “contract workers remain a blind spot. Contract labor “is a huge source of poverty creation … and it is a choice that companies make.”

The taxes.“We’re going to have another tax calculation,” she said. “The intentions that were set when many of us supported the reduction rate was… to make sure we got everyone to that rate. But the games played, especially by global companies that take advantage of international tax shelters, have undermined that goal.

All three are topics that most CEOs hesitate to discuss. But they will need to be resolved before stakeholder capitalism becomes a reality.

More news below.

Alan murray
@alansmurray

alan.murray@fortune.com


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