McKinsey: Moving towards stakeholder capitalism

McKinsey does a lot of writing on various business topics which I happen to read occasionally. A few weeks ago, an email came out on the topic of stakeholder capitalism which kind of surprised me. As a consulting firm considered the premier consulting firm, I would imagine that a lot of their consultants came from Harvard Business School and so have been pounding the shareholder drum for decades. Now they are talking the language of stakeholder capitalism. It remains to be seen if this shift is real.

Back in 2019, the Business Roundtable has said that the purpose of business was to deliver value to their stakeholders beyond shareholders: communities, employees, customers, suppliers. This statement upset decades long primacy of the shareholder. They do seem to be moving slowly in that direction, at least in areas of environmental issues, diversity and racial justice. The real test will come when it comes to delivering wages that allow employees a sustainable life. Will they also redirect some of the stream of profits from productivity back towards their employees who have helped the company achieve those profits?

The US Chamber of Commerce is another business oriented organization but I’m not aware of any stance toward stakeholder capitalism. Recent news do seem to suggest that the US Chamber of Commerce do support the spate of voting laws arising in a lot of states. History will show us in what direction those voting laws are moving: towards furthering voting rights of towards restricting voting.

There have also been some shareholder activists that have been pushing companies to promulgate the ESG policies (environmental, social justice and governance policies). I personally believe their emphasis is on environmental and governance and less on social justice. The part of the social justice that they might focus on would be the diversity, the inclusivity. But wages, such as raising the minimum wage or providing living wage, I’m dubious. I have to actually see quite a number of them pushing for increasing the wages of regular people.

There are two articles that I read: The case for stakeholder capitalism and Stakeholder capitalism: a conversation. These articles and conversations are arising out of Europe which may be further along toward a more equitable society – think Sweden, Denmark, Germany with its partnership with the workers. It may be harder for the US arm of McKinsey to pull off this kind of conversation because in the US, we still have a very hard-core capitalistic society that does not want to raise the minimum wage (and let’s face it, the McKinsey US arm was involved in the Purdue Pharma opioid scandal).