Politics of Poverty

Calling all investors: Time to let go of shareholder primacy

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fearless girl
The Fearless Girl (sculpture by Kristen Visbal) faces down Wall Street's Charging Bull. The recent corporate attacks on shareholders require that a wide range of stakeholders join forces to hold companies accountable. The result could be more responsible governance and shared prosperity. Photo: quietbits

It’s still possible to rein in corporate power.

(This blog represents the views of Oxfam, not necessarily those of its partners on the paper "Getting Ahead of the Curve on Dynamic Materiality.")

Corporate America has never been so successful at making profits, yet Americans are not prospering from this success. Even as markets continue to thrive, those reaping the benefits are largely wealthy white men.

When corporate America and its investors took up Milton Friedman’s shareholder-primacy doctrine in 1970, unions, government, and other stakeholders lost much of their ability to hold corporations accountable. Now, companies are abandoning Friedman’s doctrine, weakening the role of shareholders, the last watchdogs left unchallenged.

Not good. Yet the shift may open the door to a better model of governance and accountability.


The Business Roundtable, a trade association of the most powerful US corporations, announced in 2018 that its members were abandoning shareholder primacy by declaring that “companies should serve not only their shareholders but also deliver value to their customers, invest in employees, deal fairly with suppliers, and support the communities in which they operate.” This statement suggests they’re charting a path to a fairer and more inclusive form of capitalism, but in an Orwellian twist, “stakeholder capitalism” turned out to be part of a concerted effort by corporations to intimidate and silence shareholder voices and limit their rights.

The recent backlash against ESG (environmental, social and governance) investing is a case in point. Rather than listen to the concerns of their many stakeholders, corporations and their trade associations have begun suing investors, challenging shareholder rights, fighting SEC regulations, and suing California for climate regulations. Institutional investors are objecting to the way the new model undercuts their role in holding companies accountable.


The developments are alarming, but a new paper by Oxfam and its partners Omidyar and the Pre-distribution Initiative makes the case that investors should not fear the stakeholder capitalism model—they should own it. By joining forces with labor, climate activists, customers, suppliers, and other stakeholders, shareholders can win back the power they were stripped of.

The paper outlines mechanisms and approaches for holding companies accountable and shifting their policies. They include:

  • grievance mechanisms;
  • freedom of association and collective bargaining;
  • human rights due diligence;
  • free, prior, and informed consent for communities;
  • workers on boards;
  • worker ownership; and
  • community ownership.

Key to supporting positive long-term outcomes for all stakeholders is government oversight, in the forms of regulation, taxation, and enforcement.

Left to their own devices, corporate powers will weaponize stakeholder capitalism, but with a strategic, concerted effort, shareholders and other stakeholders can use its precepts to make their voices heard and ensure necessary government oversight. Together, we can rein in corporate power and guide the way to a safer and more inclusive future.

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