Moving from shareholder to stakeholder capitalism with The Blended Capital Group

In our current economic system, a company director's primary responsibility is widely considered to be to maximise profits for its shareholders. Their interests take precedence over those of other stakeholders – such as employees, communities, and customers – but this comes at a cost. 

When the return on investment is prioritised, the consequences are socialised: for example, air pollution caused by industry affects public health, which local communities and, ultimately, the government are likely to pay for. Such externalities are not included in the cost of operations. 

The roots of this ideology can be traced back to economist Milton Friedman, who argued in the 1970s that corporate executives' main duty is to their employers: the shareholders. But what happens if we prioritise stakeholders instead?

In this week’s episode, Giulia discusses this issue with Rob Karpati, partner and senior advisor at investment advisory firm The Blended Capital Group. As they cover the differences between shareholder capitalism and stakeholder capitalism, Rob emphasises that prioritising stakeholders isn’t charity, but smart investment that fosters sustainable relationships and creates value for all parties involved.

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