How to rethink the 'capital' in stakeholder capitalism

Some 2,500 years ago, Heraclitus proclaimed: “There is nothing permanent except change.” Reflecting on the unprecedented scale, pace and reach of change mankind has navigated over the past three years alone, it’s fair to say the Greek philosopher’s adage remains as true in the 21^st century as it was in 475BC.

Facing seismic disruptions as the tectonic plates of technological advancements, climate crisis, rising inflation and a rapidly changing geopolitical environment have met head-on, industries and organizations must navigate near-constant upheaval in order to maintain a forward, and upward, growth trajectory.

To do so successfully means rethinking the role of a CEO beyond the walls of their company towards becoming a considered voice in a variety of new domains. Today, leaders must forge both resilient organizations that lean into sustained and sustainable business opportunities, as well as becoming valued thought leaders in community stewardship and agents of broader economic prosperity.

While it’s arguable that building successful businesses has always hinged on a leader’s ability to understand and adapt to market conditions, what has shifted is the expectation that those insights remain closeted in boardrooms and business strategy elsewhere, and instead fuel a leader’s ability to become informed advocates for positive change.

As the expectation and demands on private sector leaders expand, so does the number of stakeholder groups to consider. In 2020, the World Economic Forum articulated this concept as “stakeholder capitalism”, and in 2021 followed with a set of metrics that enable organizations across the public and private sector to focus their efforts and measure their degrees of success.

Anchoring business in common standards and frameworks is undoubtedly critical to aligning endeavours. But what makes it possible to deliver on these broader demands is the emergence of a new form of organizational wealth: trust.

Here in the United Arab Emirates (UAE), trust in business, government and other institutions is among the highest in the world. The latest Edelman Trust Barometer finds a total of 78% of respondents reporting trust in businesses and 86% trust in government, compared to an average of 50% and 37% in the UK and 55% and 43% in the US.

This has not happened by chance. It has been achieved by considering a broad spectrum of interests, from economic and educational needs to personal and professional well-being. These are enshrined in “The Principles of the 50”, a set of 10 guidelines for the next 50 years designed to help all institutions in the UAE build a sustainable and more prosperous society.

It is the harmony of business and government making these principles work, and it is why at Majid Al Futtaim, we are reinforcing a holistic approach to business in our own definition of five types of capital.

The five types of capital are a centrepiece of our new strategy. They span all areas of life at our company and in all markets in which we operate, because we know that businesses and business leaders not only need a broad base to build trust upon, but also structure that keeps an even keel when navigating choppy waters.

Just like the Forum’s metrics – which prioritize people, the planet, prosperity and principles of governance as ways to ensure organizations can generate shared and sustainable value – our five types of capital are tailored to serve the needs of different stakeholders and different businesses.

While the five types of capital are distinct, they are also inextricably interdependent: This mutual support strengthens each aspect, which in turn further strengthens the whole. Across one organization, these frameworks enable cohesion, shared vision and aligned ambitions. Across many, they have the potential to shape our communities and enhance collaboration across industries and sectors.

Heraclitus’s sage reflections on change have proven true over the 25 centuries since they were first uttered, and will no doubt remain true for many more to come. It is my hope that his thoughts on ambition, that is to say “big results require big ambitions” ring equally true.