Issuers Urged to Commit to Preserving Stakeholder, Not Just Shareholder Value
Published - 15 April, 2020
Issuers affected by COVID-19 must take steps to maintain economic health and minimise downside risk as the pandemic continues to spread around the world, investors have urged.
In recent years, companies have moved away from the traditional focus on shareholder value above all else. Last year, a group of CEOs in the United States issued a statement declaring that companies would be run in the interests of all stakeholders: customers, employees, suppliers, communities, and shareholders.
A stern test
The crisis is proving a tough test for corporate commitment to stakeholder value. Protecting the workforce and maintaining financial prudence is top-of-mind for investors. This has inspired the need for companies to protect their long-term value ‘tied to the welfare of their stakeholders, employees, suppliers, customers and the communities in which they operate’.
In addition, companies are under increasing pressure from investors, regulators and lobby groups to include ESG issues – which include supporting local communities – in their business strategy.
One of the COVID-19 lessons is that the investment community could use the way in which companies deal with their employees as an indication of their readiness, values, and approach to supply chain communications and customer engagement. In other words, companies should remember that the S in ESG also includes employee strategy and engagement.
Paul Polman, former CEO of Unilever and a campaigner for sustainable business practices, summed up the situation in a recent post on LinkedIn. ‘Responsible capitalism, which seeks to move corporate culture beyond shareholder primacy, now faces its biggest test yet,’ he wrote. ‘Today’s CEOs are knee-deep in invidious choices as they attempt to absorb losses, steady cashflow and balance the competing needs of their investors, customers, staff and suppliers.’
Ince has solutions to help navigate your company through these trying times with little disruption. We can help you get in touch with stakeholders using our extensive database. Talk to us first before making decisions to reschedule your important investor relations events.
Click here to read more about maintaining good corporate governance using Ince’s suite of digital tools for working collaboratively in a remote-working world.