On 11 and 18 January, FCLTGlobal brought together global CEOs representing investors and companies to discuss multi-stakeholder capitalism and how stakeholder strategies are being integrated into long-term decision making.

Participants identified several key issues across the investment value chain that need attention for a multi-stakeholder approach to be put into practice:

  1. There is a need to define multi-stakeholder capitalism and identify stakeholders for a particular organization. Toolkits or guides to help investors and companies identify their stakeholders and their responsibility to address different stakeholder interests would be beneficial. FCLTGlobal will clarify definitions and release such a toolkit in March 2022.
  2. Effective listening is paramount to operationalizing a multi-stakeholder approach. Communication is a two-way street, not only with shareholders, but also with other parties that can have an impact on achievement of a company’s objectives. Listening to stakeholders – rather than just communicating to them – can raise important issues that could otherwise be missed. Investors should ask portfolio companies to identify their various stakeholders, articulate which issues are important, define strategies to engage them effectively, and outline ways to measure progress on issues relevant to the company’s purpose and strategy.
  3. Reframing the discussion from stakeholder trade-offs to stakeholder investments helps both companies and investors evaluate stakeholder strategies. Organizations regularly evaluate investments in R&D, brand, or new markets – and analyze whether those investments were successful over the relevant time period. Investments in stakeholders can be evaluated through a similar lens, moving the conversation away from “trade-offs” towards an investment mindset.
  4. The role of policy should not be forgotten. However, societal attitudes and diminishing faith in institutions and governments have shifted the focus of responsibility around addressing many societal issues to business leaders. While coherent regulation can incentivize long-term decision making by investors and companies, a lack of consistency in policy over time and across countries means that leaders must determine their own responsibilities, often well within what the law allows. Business leaders need to recognize that their stakeholders will have a range of expectations and determine which issues deserve their attention or leadership. 

Because we had two sessions, one with a primarily North American group and one with a broader global group, there were a few key points of differentiation between the two roundtables. In particular,

FCLTGlobal is very engaged with our membership on the issue of multi-stakeholder in practice and recognizes the need for further research on incorporating externalities into decision-making.

Earlier today, we published our empirical research collaboration with the University of Pennsylvania Wharton ESG Analytics Lab, which finds correlation of positive financial performance and corporations that perform best on stakeholder interest metrics (the “walk”) and proper communication to stakeholders (the “talk”). Read the full report here.

Our forthcoming toolkit is designed to help leaders identify and operationalize stakeholder interests. It will be released publicly in parallel with our biennial FCLTSummit on March 2, 2022.

We would particularly like to thank all of those who contributed to these conversations for their insights.

 

Conversation Starters
John Graham, CEO, CPP Investments
Adena Friedman, President & CEO, Nasdaq
Chow-Kiat Lim, Chief Executive Officer, GIC Private Limited
David Neal, Chief Executive, IFM Investors
Participants
Daniel Adamson, Senior Managing Director, Wafra, Inc.Meshal Alothman, Director General, The Public Institution for Social Security (PIFSS)Nick Ashmore, Director, ISIF, Ireland Strategic Investment Fund
Ariel Babcock, Managing Director, Head of Research, FCLTGlobalVlad Barbalat, President and Chief Investment Officer, Liberty Mutual Insurance CompanyGreg Case, Chief Executive Officer, Aon plc
Laura Chappell, CEO, Brunel Pension Partnership LtdSong Hwee Chia, President, Joint Head of Investment Group and Portfolio Management Group, TemasekJohn Connaughton, Co-Managing Partner, Bain Capital Inc.
Stephen Dainton, Deputy Global Head of Markets, BarclaysCarmine Di Sibio, Chairman and CEO, EYLars Dijkstra, Chief Sustainability Officer, Kempen Capital Management
Stuart Dunbar, Partner, Baillie GiffordJim Fitterling, Chief Executive Officer, DowCarol Geremia, President, MFS Investment Management
Greg Heckman, CEO, Bunge LimitedBobby Le Blanc, President of Onex and Head of Onex Partners, Onex CorpRebecca Lewis, Partner, Arisaig Partners
Mark Machin, Former President & CEO CPP Investments, Director Serendipity CapitalGeraldine Matchett, Co-CEO & Managing Board Member, Royal DSMClarke Murphy, Chief Executive Officer, Russell Reynolds Associates
Saker Nusseibeh, CEO, Federated HermesFranz Paasche, Senior Vice President, Chief Corporate Affairs Officer, PayPal, Inc.Dilhan Pillay Sandrasegara, CEO, Temasek
Sonya Sawtell-Rickson, Chief Investment Officer, HESTARobert Smith, Founder, Chairman and Chief Executive Officer, Vista Equity Partners Management, LLCKevin Sneader, Co-President of Asia Pacific Ex-Japan, The Goldman Sachs Group, Inc.
Carsten Stendevad, Co-Chief Investment Officer for Sustainability, Bridgewater AssociatesBob Sternfels, Global Managing Partner, McKinsey & CompanyJo Taylor, President and CEO, Ontario Teachers' Pension Plan
Howard Ungerleider, President & Chief Financial Officer, DowGeorge Walker, Chairman & CEO, Neuberger BermanMark Weinberger, Former Global CEO and Chairman, EY
Matt Whineray, CEO, New Zealand Super FundTheresa Whitmarsh, President, Independent Board MemberSarah Keohane Williamson, CEO, FCLTGlobal
Mark Wiseman, President, Alberta Investment Management CorporationRonald Wuijster, Executive Board member APG Group - CEO APG AM, APG Asset Management

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