Seminars

Current practices and academic theories assume that governments act in the best interest of society and implement the necessary policies to effectively address issues arising from externalities. Yet, governments have clearly failed to do so. This raises the question of what the private sector—both the financial sector and the real economy—can reasonably do to account for externalities and integrate them into their decision-making while fully complying with their fiduciary duties.

As most of you know, the debate over shareholder primacy – which was intensively advanced in the late 20th in both theory and practice as the essence of corporate purpose – has been faced with broader and deeper challenges. At the turn of our recent century, more and more people were urging greater recognition of the necessity of many forms of capital – not just financial but also human, intellectual, natural and others – as key to long-term value creation for both the corporation and society. At the same time, voices around the world were calling for a greater role on governance of the stakeholder groups associated with those capitals. With the creation of the International Integrated Reporting Commission in 2019 and declarations by groups like the Business Roundtable in 2019 that “each of our stakeholders is essential [and] … we commit to deliver value to all of them, for the future success of our companies, our communities and our country” it seemed a decade ago that a fundamental shift was about to take place. Then the momentum slowed and now we are facing a backlash that may be only temporary … or permanent.