Stakeholder Primacy in the post-COVID world

Martin Currie: Purpose-driven organisations aligned with shareholders, beyond stakeholders enables an environment for long-term thinking and a wider view of opportunities to flourish.

David Sheasby

David SheasbyHead of Stewardship & ESG, Martin Currie

John Gilmore

John GilmorePortfolio Manager/ Analyst, Global Equity Income Strategy, Martin Currie



August 2019 was a landmark moment in recent corporate history. In a statement released by the Business Roundtable, the group consisting of over 180 CEOs from leading US companies overturned the longheld concept of shareholder primacy. The announcement marked a paradigm shift from the doctrine famously first espoused by Milton Freidman, which advocated that the ‘responsibility of business is to increase its profits’, in favour of broader stakeholder accountability.

The impact of the COVID-19 crisis has since provided a stern test to the stakeholder model. However, despite the truly unprecedented societal and economic challenges the world has faced this year, we believe stakeholder primacy has gathered significant momentum and that it will not only survive, but thrive through these testing times. A stakeholder model does not avoid accountability. For us, a stakeholder model means that although the board is accountable first and foremost to shareholders (who elect them) the business is run in a way that emphasises and understands the dependencies and interrelationships between a business and its key stakeholders – customers, suppliers, employees, investors, communities and others.

We have seen strong evidence from corporate behaviour during the COVID-19 pandemic that suggests corporates have embraced this view when times are more difficult and, as such, this shift represents much more than empty rhetoric. Part of this change comes down to businesses embracing a wider purpose beyond the bottom line. We believe that a key part of driving long-term shareholder and societal value is by embracing this symbiotic relationship.

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COVID-19 is the World Health Organization's official designation of the current novel coronavirus disease. The virus causing the novel coronavirus disease is known as SARSCoV-2.

The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information.

The Paris Agreement is an agreement within the United Nations Framework Convention on Climate Change (UNFCCC), dealing with greenhouse-gas-emissions mitigation, adaptation, and finance, signed in 2016. The agreement's language was negotiated by representatives of 196 state parties at the 21st Conference of the Parties of the UNFCCC in Le Bourget, near Paris, France, and adopted by consensus on 12 December 2015. As of February 2020, all 196 members of the UNFCCC have signed the agreement and 189 have become party to it.

The Sustainable Development Goals (SDGs) or Global Goals are a collection of 17 interlinked goals designed to be a "blueprint to achieve a better and more sustainable future for all". The SDGs were set in 2015 by the United Nations General Assembly and are intended to be achieved by the year 2030. They are included in a UN Resolution called the 2030 Agenda or what is colloquially known as Agenda 2030.


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