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Figure 1.1 Stakeholder capitalism spectrum.

      Source: © HR rewired

      Where does your organization sit?

      It is not as simple as the assumption that you are either for or against stakeholder capitalism, that you are either a capitalist or an anti‐capitalist. It's more nuanced than that. Instead, think of it as a spectrum. At one end of the scale, customers, employees and communities are merely tools to maximise profits for the benefit of shareholders. At the opposite end, companies exist for the benefit of the public good: purpose beyond profit, and ensuring the needs of as many stakeholders as possible are met.

      You have a choice in deciding where you fit on that spectrum and much of that will be driven by your values, your mission and how you want to be perceived in your industry and by the world at large.

      Stakeholder capitalism is not a new term – in fact, it goes back to the Great Depression – but it has a new relevance. Dozens of the world's largest companies, representing trillions of pounds in market capitalization, have pledged to use a uniform set of “Stakeholder Capitalism Metrics” as part of the mainstream disclosures. This was announced 26 January 2021 by the World Economic Forum and its International Business Council when leaders from governments and corporates convened for a virtual version of the annual Davos conference. These commitments were seen as an opportunity to address the Sustainable Development Goals (SDGs; also known as Global Goals), adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet and ensure that by 2030 all people would enjoy peace and prosperity.

Regardless of whether you are a fan or a critic of environmental, social and governance (ESG) standards and to what extent you believe they are a legitimate tool to drive more sustainable and responsible business practices, it isn't possible to operate in today's and tomorrow's environment without an awareness of how your company operates against these standards.

      The leadership teams with an edge on adjusting their approach to delivering against new expectations in tackling racism are those who are using this movement to redefine their values and purpose to ensure there is an alignment between their words and actions. On the flip side, stakeholders are continually looking for indicators that reinforce commitments.

      Stakeholder capitalism isn't without its critics, of course. It's easy to claim you are a people‐centered company and give the illusion of caring about your stakeholders, even if your day‐to‐day culture and practices tell a different story.

      The reality is that in the minds of some leaders, maximising profit means avoiding anything controversial that may damage public perception, which in turn hits the bottom line.

      What is controversial?

      Racism.

      Whether we care to admit it – irrespective of how much quantitative and qualitative data exists to show that modern society still has an issue with racism, that everyday human rights are being violated and often recorded on mobile phones and talked about in real time on social media – for some, genuinely addressing the issue is too risky.

      Silence on issues relating to racism was the smart and safe play. Until silence itself become controversial.

We saw a plethora of companies change their social media feeds to black, and incorporate the latest trending Black Lives Matter hashtag to ensure they were seen to be acting in solidarity with the Black community. Whilst the world was distracted, there wasn't an initial focus on the substance of these commitments. The hype was real, and well‐known brands swiftly committed to doubling or tripling the number of Black hires in senior positions (conveniently using percentage language, which doesn't sound nearly as great when you realise that doubling the percentage of Black managers by 50% actually means hiring one more Black person if there's only currently one Black person on the board), and propelled ever‐increasing budgets to social justice funds like auctioneers at Homes Under the Hammer. Anecdotal stories abound of companies committing millions in social justice funding, only to have it revealed that a year later barely a penny had been spent. It quickly became apparent that a lot of organizations opted for style over substance.

      This sudden pressure to act caught many unawares. In their bid to do something, many took knee‐jerk and fragmented actions, sometimes simply rehashing old approaches to diversity and inclusion and relabelling them as anti‐racism.

      Because who were you if you weren't anti‐racist?

      Racial equity as a term came later. When there was a concern the word racism was too divisive.

      However, the general public and colleagues wised up and began to scrutinise who was doing what and what was their quantifying impact.

      Statements, hashtags, clever social media posts were no longer cutting it. Companies had to do something, so where did the majority start?

      We are revamping our policies and reaching out to our Black colleagues. They are in so much pain and it breaks my heart.

      HR manager, 2020

Developing Awareness

The most typical response to addressing

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