Stakeholders: Ethics & Value for All

In our “post-capitalist” world, people are concerned with more than the shareholders of a company, they are concerned with all stakeholders. Shareholders are also stakeholders, but they are one of many interests to consider, and not necessarily the most important. And the “purpose” of business is no longer defined as increasing shareholder value, but instead increasing value for all the stakeholders. Economic development discussions often replace the conventional “bottom line” with the “triple bottom line” measuring the impact on people, planet and profits.

For purposes of this discussion, we can call the following stakeholders, because each bears the consequences of the actions of corporations: shareholders, lenders, employees, suppliers, competitors, customers, government institutions and the community. I include the environment or the planet as a subset of many or all of the stakeholders because as the environment goes, so go the rest of the stakeholders.

What if a corporation paid its lenders per the terms of agreements, provided employees with meaningful work at a good wage, encouraged other businesses to grow (be those suppliers or competitors), sold customers a quality product for a fair price, abided by and helped to create laws and regulations that were good for the community and in all of the above improved the general standards of living of the community as a whole? That seems like it would be a company in which one could feel good about being a stakeholder. But you’ll note the shareholders are conspicuously absent from this list of stakeholders above. What if the shareholders of that company took their profits and spent them on frivolous living? What if they used those profits to advance causes that infringed on human rights? What if they used them to fund the sale of arms to those committing genocide? What if they simply used company funds to support a political party with which you disagree? Are any of these reasons to choose not to be a stakeholder in a corporation that otherwise seems to be doing so much good? Does the good being done by the corporation outweigh the consequences of the shareholders’ personal use of the profits? Is that even the right question to ask?

I don’t believe there is a moral or ethical rule to be followed or broken here. But as with many moral or ethical questions, it is to be thoughtfully assessed on a case-by-case basis and decided upon in the specific context of the stakeholders involved.

We are trying to do this on a regular basis in Rwanda. Here, it is possible to see the various extremes in the levels of power and it is easy to see the significant impact businesses have on their stakeholders. But as I write this, I realize our questions are not unique to this place; the same moral questions can be asked of any of the institutions we work for, regardless of geography.

Dano Jukanovich