Why the road to stakeholder capitalism begins with diverse boards – The European Sting – DC Initiative on Racial Equity
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This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Ronald P. O’Hanley, Chairman and Chief Executive Officer, State Street

  1. Ronald P. O’Hanley Chairman and Chief Executive Officer, State Street
  • Stakeholder capitalism aims to ensure economies improve society and protect the planet.
  • We need diverse leadership in the boardroom to reflect various stakeholder interests.
  • Investors, regulatory bodies and corporate boards are thinking beyond “profit at all costs”, but more can be done.

The age of stakeholder capitalism has arrived. The question is, how do businesses shift from an exclusive focus on financial performance for shareholders toward generating shared value for shareholders and other stakeholders? How do we make stakeholder capitalism more fully lived and felt.

I believe that the road begins with corporate boards. Specifically, high-quality, diverse, and independent board leadership that can navigate differing priorities and horizons among constituencies. I use the word diverse in its broadest sense: a definition that starts with non-uniformity of thought and encompasses race and ethnicity, gender and sexual orientation, religion and age, geographic and socioeconomic backgrounds, and more.

Diverse boards perform better

A Harvard Business School study found that women brought to the boardroom a different set of perspectives, experiences, angles, and viewpoints than their male counterparts. Similarly, a McKinsey study found that companies in the top quartile for gender diversity on executive teams were 25% more likely to have above average profitability than companies in the fourth quartile. Related to ethnic and cultural diversity, McKinsey found top quartile companies outperformed those in the fourth quartile by 36% in profitability.

What’s the World Economic Forum doing about diversity, equity and inclusion?

The COVID-19 pandem

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