The stakeholder capitalism revolution is well underway

Published date: 07 February 2022

Multi-stakeholder demands for transparency on sustainability impacts can’t be ignored

What does adopting ‘stakeholder capitalism’ really mean, and why should companies be accountable for their impacts on society and the environment, and not only the interests of investors?

These key issues are addressed in Towards stakeholder capitalism: how we can get there, the second instalment of ‘The GRI Perspective’. This new regular series dives under the surface of topical themes in the world of sustainability reporting.

The paper reflects on January’s annual letter to CEOs from Larry Fink, CEO of BlackRock, in which he called for companies to “create value for and be valued by its full range of stakeholders 

Insights from The GRI Perspective include:  

  • There is a continuing perception shift in business culture – from value creation that benefits shareholders alone towards one that takes account of a broader set of stakeholders, encompassing social engagement and environmental impact.
  • Explaining how a company’s actions seek not only to be profitable, but also to safeguard stakeholder interests, is a powerful tool to demonstrate their contribution to people and planet. 
  • A stakeholder-centric corporate strategy can have multiple benefits – from enhancing reputation and brand to improved ability to hire new staff, from mitigating environmental risks to increased access to capital markets. 
  • Shareholder capitalism without reporting on the impacts of sustainability issues on value creation makes little sense. Stakeholder capitalism, meanwhile, without sustainability reporting that reflects the needs of society and the environment makes no sense either.  
  • Achieving socio-economic and environmental cohesion demands a wider perspective than climate metrics or investor interests alone: this is where GRI’s world-leading, multi-stakeholder sustainability reporting standards come into play, alongside financial disclosure. 

As Larry Fink stated last month, “stakeholder capitalism is not woke, its capitalism”. At GRI we are in firm agreement – yet failing to endorse sustainability reporting that meets the needs of a multitude of stakeholders falls short of the societal expectations of true stakeholder capitalism. We understand that businesses need to be profitable, and that doing so in a way that does not conflict with their obligations to people and the climate can be challenging. At the same time, understanding and managing sustainability risks is a prerequisite when responding to the transparency needs of stakeholders, which include investors. That’s why corporate reporting needs to fully reflect impacts on the economy, environmental and society, as enabled by the GRI Standards. We believe the best way that this can be achieved is by moving to a comprehensive, two-pillar reporting system – with financial and sustainability disclosure on an equal footing.

Peter Paul van de Wijs, GRI Chief External Affairs Officer

The previous issue of The GRI Perspective, A business case for environment & society, published in January and looked at changes in the sustainability reporting landscape, including developments by the EU and the IFRS.