Have companies become more focused on stakeholders and toned down their attention to the interests of shareholders? Many argue there has been a shift but Harvard academics say they have evidence that is it is more like business as usual.

After looking the evidence from 48 US companies signed up to a ground breaking pledge to work for “all stakeholders” rather than shareholders alone, Lucian Bebchuk and Roberto Tallarita, experts in governance at Harvard Law School, conclude than in reality nothing much has changed.

Writing in the Wall Street Journal, the pair say: “Notwithstanding statements to the contrary, corporate leaders are generally still focused on shareholder value. They can be expected to protect other stakeholders only to the extent that doing so would not hurt share value.

“That conclusion will be greatly disappointing to some and welcome to others. But all should be clear-eyed about what corporate leaders are focused on and what they intend to deliver.”

‘No major change’

Bebchuk and Tallarita look at companies who signed up to an August, 2019 statement from the Business Roundtable —a club for US corporate leaders, then chaired by JPMorgan Chase chief executive Jamie Dimon—which saw 180 big name companies declare: “Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

The statement was reported around the world and is frequently cited as evidence that corporate attitudes have changed and a fundamental shift is underway at the heart of capitalism.

The Harvard profs conclude the evidence is lacking. They asked Business Roundtable companies if the decision to sign up to the statement had been cleared by their boards. Of the 48 that replied just one confirmed its board was consulted first. The other 47 “indicated” their boards were not involved.

Bebchuk and Tallarita wonder why chief executives would sign up to such a significant statement without the green light from their boardrs. The most “plausible” explanation, they say, is that the CEOs did not believe the statement entailed any major change to the way stakeholders would be treated.

The profs note it could be because CEOs are convinced their stakeholders are already well considered. “But it still implies that they believed signing the statement wasn’t a major step for their businesses,” they write.

Then they dug a little deeper looking at the board-approved governance guidelines published by a number of the companies. They found they “mostly reflect a clear ‘shareholder primacy’ approach.”

They cite the example of JPMorgan Chase itself, where guidelines clearly state the board works “on behalf of the firm’s shareholders.”

Acceleration

Where does that leave stakeholderism? It’s no secret that many have argued fundamental change would be needed for the movement to really gain traction. In the UK, at least, the Institute of Directors has set up an entirely new governance centre to specifically explore this issue.

It may also be the case that boardroom approval and governance guidelines are not sufficient to prove that stakeholderism is absent in the US or elsewhere. Policy decision making at different levels—including chief executives acting alone—may reflect a shift to new forms of corporate behaviour, regardless of board-sanctioned decisions.

When the Sustainability Board Report , a campaign group, looked as corporate statements made by the world’s largest 100 companies as a result of Covid-19, it concluded there was evidence to suggest stakeholderism had “accelerated” during the pandemic. But it was inspecting disclosures about policies relating to employees, customers, suppliers and communities rather than formal boardroom approval processes or redrafted governance guidelines.

That might suggest CEOs make decisions that reflect stakeholderism without constructing a formal board-approved shift in approach. For that matter, it might also indicate such a movement could be short-lived and swing back once the threat of Covid-19 has receded.

Campaigners hope not. Close observers might also ask how stakeholderism might be properly observed or even measured.

The discussion has a long way to go. Bebchuk and Tallarita raise important questions with some compelling evidence. But it’s not entirely clear we’ve reached a final verdict on stakeholderism.