Corporate Secretary’s “Stakeholder capitalism and the board: Taking on a new mindset” (sponsored by Morrow Sodali) reveals benchmarking data on the board’s involvement in “stakeholder capitalism” issues and related topics based on the results of a late 2021/early 2022 survey of governance professionals worldwide (59% North America) across predominantly public companies (40% mega- and large cap | 20% mid-cap | 31% small-cap).
North America-specific findings (except as otherwise indicated) include:
Board oversight
- The majority of companies report some oversight of stakeholder capitalism at the full board level—both for companies based in North America (59%) and across market caps globally. As to North America specifically, 28% of respondents (across market caps) also reported Nom/Gov Committee oversight, while 20% said they don’t consider stakeholder capitalism. Other board standing committees have nominal involvement.
- Board committees charged with stakeholder capitalism oversight (if applicable) most commonly report to the full board on these issues—and full boards most commonly discuss stakeholder capitalism issues—on an ad hoc basis.
Investor interest
- Nearly half (and a plurality) of North America respondents (compared to 40% globally) said their investors have never asked questions about stakeholder capitalism issues affecting their company. Responses varied significantly by market cap globally, with 44% of mega-caps indicating that they frequently or very frequently get questions from investors, compared to just 4% of large-caps.
- Consistent with the foregoing, while only 17% of North America respondents characterized stakeholder capitalism issues as very or extremely important to their investors, this compares to 53% of global mega-cap respondents and just 16% of global large-cap respondents.
Engagement
- Nearly three-quarters of respondents (on par with the global average) reported their company seeking information on the needs of stakeholders other than shareholders.
- The vast majority of companies (75%) reach out to stakeholder associations/organizations when seeking information on the needs of stakeholders other than shareholders. Stakeholder association/organization outreach is also the most common tool used globally and across market caps. Other popular avenues for North America companies seeking information on non-stockholder stakeholders include market research (50%), impact assessments (38%), and social media/internet (33%).
- Boards most commonly engage with shareholders (58%) and customers (54%). This is also the case globally and across market caps.
Strategy
- Just 14% of respondents said their company has a defined stakeholder capitalism strategy, and 10% say they have plans to develop one in the next year, although a measurable percentage don’t know if their company has one (21%) or plans to develop one (26%).
- A significant minority of respondents indicated that executive compensation at their company is linked to corporate purpose.
See “Most companies looking at non-shareholder stakeholder interests, survey finds” (IR Magazine) and additional resources on our Stakeholder Governance page.
This post first appeared in the weekly Society Alert!