Davos: The stakeholder capitalism debate is over

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Good morning.

“Stakeholder capitalism” is nothing new in Davos. It’s been part of the ethos of the World Economic Forum since it was founded a half century ago. But the Business Roundtable’s decision last August to revise its statement on corporate purpose has given the issue new life this year, with countless panels and conversations on the topic being held in meeting rooms and over meals throughout this Swiss village.

This morning, I attended a breakfast session billed as a debate over stakeholder value versus shareholder value. But there was no debate. The four CEOs participating agreed they face growing demands to look after stakeholders—customers, employees, their communities, and the environment. But all insisted that doing so was in the long-run interest of shareholders.

“It’s not a ‘versus’,” said James Quincey, CEO of Coca-Cola. “The Coca-Cola business has been set up under a simple idea for a long time: it can’t be a viable business without a viable community.” Unilever CEO Alan Jope agreed: “The predominant paradigm is an either/or paradigm—either deliver financial performance, or pay attention to social impact. We believe nothing could be further from the truth.”

Jope says his company’s focus on sustainability has had a positive impact on innovation, on cost, and “it has made us an absolute magnet for talent. Unilever has gone from being an unknown company in the talent market to being ranked by LinkedIn as number three, after Google and Apple.” Stanley Black & Decker CEO Jim Loree told a similar story. Embedding social impact in its corporate purpose has been transformative, he says. “I had no idea how impactful it would be for employees. Employees are so motivated by this approach.”

But the big change from two or three years ago is in the financial markets. “This topic has evolved massively,” said Geraldine Matchett, the CFO and incoming co-CEO of DSM, the Dutch nutrition and materials company. “For a long time, this was a minor, niche, ‘impact investing’ topic,” largely ignored by investors. Now it has moved front and center: “Suddenly, we are having a conversation instead of a monologue.”

Fortune will continue that conversation tonight, with a dinner including the CEOs of Microsoft, UPS, Workday, Mastercard, Deloitte, Salesforce, RBC, Royal Phillips, Genpact, PayPal, Henry Schein, Dassault, Dow Chemical, Occidental Petroleum, Novartis, HP, HP Enterprise, Sanofi, A.P. Moller-Maersk, and more.

News below.

Alan Murray

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