Stakeholder value creation is a popular topic these days, with many CEOs claiming their companies are focused on creating value for all stakeholders in the interest of generating long-term business value.
But it can be difficult to determine which companies are walking the talk on stakeholder value creation. One way is to look at a company’s board’s terms of reference. A quick check will tell if the board has explicit oversight of the company’s relationships with stakeholders, and the value the company is intentionally creating for them.
If this oversight role is missing — as it often is — you’ve found a stakeholder governance gap.
With investors looking closer than ever at how companies create value for stakeholders, this gap won’t last long. Companies must move from paying lip service to full service when it comes to stakeholder value creation.
Investors step up on stakeholder awareness
In his 2022 letter to CEOs of the companies in which he invests, BlackRock CEO Larry Fink opined:
“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. […]
In today’s globally interconnected world, a company must create value for and be valued by its full range of stakeholders in order to deliver long-term value for its shareholders. It is through effective stakeholder capitalism that capital is efficiently allocated, companies achieve durable profitability, and value is created and sustained over the long-term. […]
Putting your company’s purpose at the foundation of your relationships with your stakeholders is critical to long-term success. […]
Our conviction at BlackRock is that companies perform better when they are deliberate about their role in society and act in the interests of their employees, customers, communities, and their shareholders.”
It remains to be seen how BlackRock will operationalize its interest in companies that put their purpose at the foundations of their stakeholder relationships. But this is a significant investor signal.
