Donald Trump, Greta Thunberg, Satya Nadella, Lenny Kravitz… there were a lot of big names at the World Economic Forum in Davos this week. But the person that generated the most buzz didn’t even have a name.
You couldn’t walk 10 steps at the latest alpine gathering of the global elite without overhearing someone talking about “stakeholders.” The s-word appeared in the title or description of no fewer than 13 sessions on the forum’s main program, and many more in the unofficial fringe.
This reflects the rapid shift in thinking about the purpose of companies. The Davos organizers unveiled a revamped manifesto this week, saying a company’s purpose should be to “engage all its stakeholders in shared and sustained value creation.” Last year nearly 200 of America’s top CEOs issued a similarly touchy-feely proclamation.
But as Klaus Schwab, the WEF’s avuncular founder, pointed out in his opening speech this week, “stakeholder capitalism” has been in the forum’s mission since 1973. And the risk is that it will continue to be nothing more than woke-washing. Corporate bosses’ pay is still tightly tied to shareholder returns. If you really wanted to serve employees, communities, and the like, it would be more effective to make the case that doing so would boost profits. As Uber’s Dara Khosrowshahi told a Davos dinner gathering, “the one master that can put me out of a job” is shareholders.
The other obstacle to taking things besides profit into account is that you can’t manage what you can’t measure. Marc Benioff, the CEO of Salesforce and a perennial Davos gadfly, said that “the planet is a key stakeholder.” (Just try to measure that.) Environmental, social, and governance (ESG) measures are finding their way into portfolios at major asset management firms, but these broader concerns remain a niche proposition.
So it’s encouraging that the Davosians (Davosiati? Davosoise?) this year agreed to develop some universal ESG measures everyone can agree on. That makes stakeholders the biggest winners of the World Economic Forum this year. Congratulations, whoever you are. Sorry it took so long.
This essay was originally published in the weekend edition of the Quartz Daily Brief newsletter. Sign up for it here.