Ira Millstein: Stakeholder Capitalism Is Slowly Advancing – WSJ

Ira Millstein’s letter calls for more optimism on the BRT’s stakeholder claims, though (1) he admits he has no data to support it and (2) even he does not expect the executives who make the claim of a stakeholder focus to deliver; he thinks it will be the result of market forces from outside the company.

Lucian Bebchuk and Roberto Tallarita’s op-ed “‘Stakeholder’ Talk Proves Empty Again” (Aug. 19) is probably correct, as far as it goes. On its face, the Business Roundtable’s statement is far from having been meaningfully implemented. Market pressures from investors to sustain profits are substantial.

On the other hand, progress, while glacial, is occurring and the Business Roundtable’s statement may have been a pull. Institutional investors are now rattling the cage in favor of recognizing stakeholder values such as wages, working conditions and environment. Major investors are now with policy positions of their own, making it clear that they will, in the future, take account of what companies may or may not be doing regarding stakeholders.

Public pressure from consumers to rectify some of the problems and inequalities of the past is also mounting.

While I haven’t done the field research, I have been watching these events and participating in them one way or another for more than 40 years. I think I can speak as an honest critic and adviser.

Accordingly, I am less dubious of the future than are Messrs. Bebchuk and Talarita. In the end, I count on mounting public and institutional pressures to begin to address these problems, perhaps at some sacrifice of immediate shareholder value, but in favor of longer-term value and values.

Ira M. Millstein New York Mr. Millstein is adjunct professor at Columbia Business School and Law School, where he is also founding chair of the Millstein Center for Global Markets and Corporate Ownership.

Stakeholder Capitalism Is Slowly Advancing – WSJ

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