Stakeholder Capitalism: Driving Global Sustainable Growth

Stakeholder capitalism is an economic system in which firms are accountable for not only maximizing profits but also meeting the demands of a broad range of stakeholders, including employees, customers, suppliers, and the environment. This form of capitalism is spreading throughout the world as companies realize the value of long-term value generation and sustainable growth. 

Various stakeholders to consider for businesses (sourced from- World Economic Forum Image: Schwab, Modern Company Management in Mechanical Engineering, 1971)

The Rise of Stakeholder Capitalism

Although the idea of stakeholder capitalism is not new, it is gaining popularity as the globe faces serious economic, social, and environmental problems. Businesses are recognizing to a greater extent that they can’t function in a vacuum and that what they do affects the environments and communities in which they operate. Businesses can generate value for all stakeholders by adopting a more comprehensive view of capitalism.

The Benefits of Stakeholder Capitalism

Stakeholder capitalism has several benefits for businesses, including increased innovation, improved risk management, and enhanced reputation. By taking a long-term view, companies can build stronger relationships with stakeholders, leading to greater customer loyalty, higher employee engagement, and better supplier relationships. Additionally, companies that take a more sustainable approach to business are better positioned to adapt to changing market conditions and capitalise on emerging opportunities

The Role of Governments

Stakeholder capitalism can be promoted in large part by governments. By offering tax exemptions to corporations who make investments in renewable energy sources or offer benefits to their workers, they can encourage enterprises to adopt a more comprehensive view of capitalism. Governments can also enact laws that require businesses to report their social and environmental impacts in order to encourage greater accountability and transparency in corporate practices.

The Road Ahead

There are complications in stakeholder capitalism. The generation of long-term value remains a low priority for many businesses, and methods for gauging a company’s influence on stakeholders are not established. However, as businesses and investors increasingly value sustainable development and ethical practices, stakeholder capitalism is gaining momentum.

The Global Stakeholder Model Image: “Stakeholder Capitalism”, Klaus Schwab and Peter Vanham, Wiley 2021 sourced from World Economic Forum


In conclusion, by generating wealth for all stakeholders, not just shareholders, stakeholder capitalism has the ability to promote sustainable global growth. Stakeholder capitalism is growing, which is a good sign, but to make it the norm as opposed to the exception, firms, governments, and civil society must ramp up their efforts.

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