COVID-19 is accelerating stakeholder capitalism

It seemed a monumental milestone was reached in August 2019 when more than 180 CEOs signed the Business Roundtable’s new Statement on the Purpose of a Corporation and committed to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.

Fast forward nearly two years and a global pandemic brings you quickly to the realisation that stakeholder capitalism is an urgent imperative – a critical strategic shift that is required for corporations to stay relevant and engaged in today’s world of accelerating environmental, social and governance (ESG) change.

Keeping the world running

During the COVID-19 pandemic, businesses engaged with society and government to keep the world running. Industrial companies applied their mass-manufacturing know-how to make much-needed medical equipment. 3M pivoted from post-it notes to making masks; GM to building ventilators. Pharmaceutical companies accelerated vaccine development, and businesses across industries accelerated distribution by rolling out onsite COVID-19 vaccines.

At Stanley Black & Decker, we implemented critical safety protocols and guided our employees on how to keep themselves and their families safe during this time. We distributed more than 70 million masks to employees to share with their families and community members. We more than tripled our charitable contributions in 2020, donating more than $22 million to COVID-19 relief funds globally, nationally and locally, and awarded over 4,500 employee relief grants related to COVID-19.

We also established a global, company-wide COVID-19 Community Response Task Force to innovate and save lives, which included a partnership with Ford, 3M and DEWALT to produce 40,000 Portable Air Purifying Respirators within three weeks, impacting a million lives.

Companies proved their agility during the pandemic, stepped up to take care of their customers and employees, and not only survived, but thrived. And many continue to build on that momentum.

In June 2021, Business Roundtable members acted on the commitment to break down barriers to economic opportunity in the US, and to promote racial equity and justice in communities of colour who have been disproportionately impacted by the COVID-19 pandemic.

Amazon, for instance, launched its Black Business Accelerator with a $150 million commitment to build equity and sustainable growth for Black-owned businesses. This initiative will provide financial support, business education and mentorship, and marketing and promotion of their brands and products as third-party sellers on Amazon.com.

Best Buy committed to spend $1.2 billion with BIPOC and diverse businesses by 2025, including improving how it brings goods and services to stores, its supply chain partners, and where and how it advertises. The goal is to create a stronger community of diverse suppliers and to help increase BIPOC representation in the tech industry.

And Coca-Cola North America announced plans to nearly double its spending with minority-owned media companies over the next three years. For more information on the Business Roundtable racial equity and justice initiatives, click here.

It’s about ESG, for sure, but a strategy to do good by being good is rooted in purpose and grounded in stakeholder capitalism.

Stanley Black & Decker started our purpose journey when I became CEO five years ago in recognition of the changing expectations that stakeholders have of corporations, the rapid adoption of technology and the accelerating pace of technological change, and the challenges of governments and other institutions to keep up with the pace of change without help from agile and resourceful corporations. Our purpose and our people-centred culture enable us to recruit the best talent, retain it, innovate in exponential ways, and position the organization to constantly move forward with agility in a rapidly changing world.

A boost in public trust

The importance of stakeholder capitalism was obvious during the pandemic and business received a boost in public trust, according to Edelman’s Global Trust Barometer data. Business is now more trusted than government, media and nonprofits, and is the only one of the four institutions that’s viewed as both competent and ethical.

According to Edelman’s “2021 Trust Barometer Spring Update: A World in Trauma”, business outperforms government on key societal challenges: driving economic growth and job creation, responding to the health and public safety aspects of the COVID-19 pandemic, guarding information quality, and addressing systemic inequities. What’s more, employees have emerged as the most important stakeholder, as 40% of respondents rank a company’s workers as most important to its long-term success. Nearly 8 in 10 employees expect their companies to act on societal issues, such as vaccine hesitancy (84%), climate change (81%) and automation (79%).

Against this backdrop of public trust, there is no question of who is best poised to carry the mantle on societal issues. The COVID-19 pandemic has issued a clarion call to business to step up – from climate change, to racial justice and equity, to vaccination access, and more.

It’s high time we stopped debating whether stakeholder capitalism makes sense – and instead embrace the progress the private sector has built and continue to accelerate.