Stakeholders Take Center Stage: Director Views on Priorities and Society

Stakeholders Take Center Stage: Director Views on Priorities and Society

Today, companies are receiving significant pressure to focus on more than just profits. This stakeholder-centric model of company governance—one that places customers, employees, and communities on equal footing with company shareholders—has received significant attention in the U.S. on the heels of the August 2019 Business Roundtable, where nearly 200 CEOs agreed to this stakeholder commitment. Whether a fundamental change or a PR play, this refocusing of corporate priorities is being driven by a sense of uncertainty: political, economic, social, and environmental. What is the purpose of a corporation: to make money or to make the world a better place?

Meanwhile, many other countries (especially European countries) have embodied the stakeholder approach for decades; it’s inherent in the governance structure of Germany’s two-tier board and various national corporate governance codes. Yet, non-U.S. companies are hardly exempt from balancing the interests of their global shareholders with those of regulators, consumers, and employees.

So how do directors balance the various kinds of pressure they feel in the boardroom? Are they being pulled in different directions? As overseers of organizational risks and profits alike, board members are at the heart of discussions around corporate purpose—but where do their loyalties and priorities lie?

The Diligent Institute partnered with the Rock Center for Corporate Governance at Stanford University on a global survey to better understand how boards are balancing shareholder and stakeholder needs. Nearly 200 directors of public and private corporations were surveyed over the summer of 2019.

Download the full report to learn what we found.