skip to content

Cambridge Institute for Sustainability Leadership (CISL)


14 January 2021 – Contributing to the World Economic Forum's The Future of the Corporation white paper, CISL's Founder Director Dame Polly Courtice discussed the implementation of stakeholder governance within organisations and how to bring the voices of key stakeholders more effectively into the boardroom.

Dame Polly Courtice DBE, LVO, was Founder Director of the University of the Cambridge Institute for Sustainability Leadership (1989–2021). She is now Emeritus Director and Senior Ambassador, CISL.

How has the Covid-19 pandemic affected the move towards stakeholder governance? 

The pandemic has laid bare fissures and frailties in our political, social and economic systems, revealing some of the inherent consequences of global interconnectedness that we have so often discounted and that have now emerged to test our resilience at an existential level. It has compelled us to take a fresh look at how our systems work and posed some fundamental questions about what really matters in society – to debate at an intensely personal and intergenerational level questions such as “Whose needs have greater priority?”, “What is the right balance between individual liberties and collective interests?” and “What is the relationship between economic and human health?”  

It remains to be seen whether the plans to Build Back Better will be effective in addressing these debates – many of which have led to deep polarizations within society – and at the same time build an economy that addresses inequality and climate change, and protects and restores nature. The scale of these challenges will require a more fundamental transformation of our systems than “building back” implies. In reality, many of the most powerful and influential individuals and organisations have a vested interest in returning to the status quo. But for millions of others – often those with the least power and influence – the old system was profoundly unsatisfactory and they are looking for – demanding – profound change. 

The real test is whether the pandemic has done enough to shock the system into delivering that change. Policy-makers, investors and companies will need to recognise that the system failures that were destroying the natural world and human well-being have to be corrected in a meaningful and lasting way to create a genuine shift towards stakeholder capitalism. 

In short, the pandemic has acted as a wake-up call and provided an opportunity to do things differently. The real question is: Will we stay awake? 

Who are the main critics of stakeholder capitalism

Despite all the talk of stakeholder capitalism, there are still plenty of advocates for shareholder primacy. Arguments continue about stakeholder capitalism reducing accountability and market efficiency. Others claim it is little more than PR. But in reality, stakeholder capitalism – done well – can actually increase accountability and deliver positive outcomes. In the face of rising societal expectations and compelling scientific evidence that things need to change, more and more companies understand that they need to be advocates for a new form of capitalism that puts profitability and financial performance alongside the non-financial contribution. 

The response of many companies to the pandemic in supporting employees and communities has sent some really positive signals, giving companies an opportunity to show their socially responsible and more human side, which has resonated with employees and the public alike. What is needed now is for this to become a normal, permanent feature of how they behave, not just a one-off response to a crisis in their local communities. It needs to become an embedded set of behaviours that takes into consideration the lives not only of those stakeholders who are in their direct line of sight but also of those who are far out of sight. This includes those in their supply chains, or indeed future generations, and creates meaningful and long-term value for society and the environment. So, encouraging as the recent commitment of the Business Roundtable in the US to stakeholder capitalism is, companies need to commit to going beyond supporting employees and local communities and call for profound systems-level change – for legislative reforms that reflect the fact that, ultimately, a company’s fundamental purpose should be to benefit society. 

What is the role of the board in progressing stakeholder capitalism? 

Many of these stakeholder-based strategies have been driven by the vision and business insight of executives who are close to the business action and can see clearly that positive stakeholder impact is directly in the interests of the business. 

The board has an equally important role to play, not only in giving the executive the mandate and supporting and encouraging these strategies but also in ensuring that a clear and compelling purpose is the guiding star of the business. Without full board backing, and without a driving purpose, it can be exceptionally hard for executives to take a proactive stance rather than remain on the back foot and take a reactionary approach to the changing external context. 

Many boards still lack a deep understanding of the true context within which they are operating – of the full implications of the existential threats of climate change and the destruction of ecosystems, and the real significance of social injustice as a force that will increasingly need to be reckoned with. Without this understanding of the structural pressures and trends that will, with increasing urgency, affect society as a whole – they will not be best placed to position the company for long-term success. Armed with this understanding, they are better placed to make good decisions, to take responsibility for the company’s direction of travel and to own with confidence their full impact on society and the environment. 

Purpose-oriented companies think about these ultimate end goals of the business. In many ways, this defines their social contract and often requires a fundamental rethink of the old norms – of their relationships with customers, suppliers and communities, with existing business and economic models, and with the natural world. To take a single example: Integrating meaningful, purpose-driven non-financial measures into compensation structures often requires measures that many companies simply do not currently have available. The fact that a growing number of companies are grappling with these issues and developing new metrics and tools to enable them to do so is an encouraging sign, and one that needs full board support. 

What can directors do differently to bring stakeholder voices to the boardroom?

Bringing stakeholder voices into the boardroom is increasingly being called for. In reality it requires real determination on the part of the board to do this in a way that goes beyond tokenism, and a willingness to take some risks. Progress can be slow, particularly in formal board appointments, but there are some good examples of where companies have experimented, sometimes cautiously, in bringing in these voices. As a minimum, a growing number of boards have made a start by appointing genuinely influential external advisory boards, comprising scientific experts and civil society representatives who expect to be listened to, and who have been shown to have had significant influence, not least in setting ambitious targets for net zero by 2050 or sooner, and addressing issues of social justice. But real change will come when the stakeholder voice is seen as a normal part of the decision-making process of a board. Faced with the consequences of our reckless experiment with nature and the moral burden of social injustice, the progress being made by the corporate sector is woefully inadequate. But we have to build on positive signs and encourage the efforts made by those companies that, through their purpose, seek to be part of a form of capitalism that is more inclusive, restorative of nature and ultimately, sustainable, in the full and literal sense of the word.

Read the World Economic Forum's white paper The Future of the Corporation: Moving from balance sheet to value sheet.

Listen to Polly discuss the importance of taking action for a more sustainable world on the World Economic Forum's Meet The Leader podcast.




Staff articles on the blog do not necessarily represent the views of, or endorsement by, the Institute or the wider University of Cambridge.

The Future of the Corporation: Moving from balance sheet to value sheet

This white paper supports the Future of the Corporation initiative at the World Economic Forum and its platform on Shaping the Future of Investing. As corporate leaders face unprecedented challenges from an array of emerging health, economic, environmental and social challenges, new approaches for governance are needed to enable transformative change and business success.

The paper was produced by the World Economic Forum in collaboration with Baker McKenzie.

The World Economic Forum, committed to improving the state of the world, is the International Organization for Public-Private Cooperation. The Forum engages the foremost political, business and other leaders of society to shape global, regional and industry agendas.


Zoe Kalus, Head of Media  

Email | +44 (0) 7845652839