GRI: The stakeholder capitalism revolution is well underway
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.
GRI
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