Chief executives have enough to worry about running complex businesses in a challenging environment and a prospective recession to boot without having to deal with political figures attacking them as “woke CEOs” for their focus on diversity and sustainability, a group of them said during a Fortune conference in Florida this week.
That so-called “stakeholder capitalism” they advocate is simply corporations focusing on doing well by doing good and was the focus of a panel at Fortune‘s The CEO Initiative summit in Palm Beach, Fla. on Wednesday. The state’s governor, Ron DeSantis, has repeatedly taken aim at chiefs looking to hit ESG (environmental, social, and governance) goals, one of many Republican politicians taking aim at corporate America focused on social and environmental matters. In some states, political figures have gone as far as threaten to ban investments by state funds in companies focused on ESG.
But the CEOs at the conference say stakeholder capitalism merely reflects capitalism’s ability to revitalize itself and ensure its future. It’s also a matter of talent attraction and being in tune with what workers, investors, and other stakeholders expect of companies in this day and age.
“It’s very important to listen to them (employees and other stakeholders) and understand what their expectations are because they truly are wanting to make better a company they want to work for, to make an impact on the environment and on the communities where they are participating,” said Chano Fernandez, co-CEO of Workday. “There is a great correlation between purpose and stakeholder capitalism and good business.”
The CEO of Schnitzer Steel Industries, Tamara Lundgren, said there was “nothing new” in the fundamental idea of stakeholder capitalism, and that many companies have long understood the value of doing well by their employees and society at large as being beneficial to business, but that it should remain at the forefront of a corporation’s priorities.
Penny Pennington, managing partner of Edward Jones, said that the first thing prospective employees ask about when considering job offers is the financial firm’s annual impact report. At the same time, Pennington said, it was important for a company to be focused on what social problem or issue to tackle and home in on those that are directly connected to its business, rather than try to address all of society’s ills. In Edward Jones’ case, Pennington said, it was financial security and wealth inequality.
“So financial security is our lane. And if we’re long-term in our view, that means equity and access to financial education and advice is absolutely central to our longevity. So it matters. Social mobility has to matter to us,” Pennington said.
As for Moynihan, he said whatever the bank does will earn it critics. Bank of America invests in fossil fuel companies, but it also invests in renewable energy companies, he noted as one example. Ultimately, Moynihan said, capitalism has to be flexible to respond to the societal concerns of the era—whatever labels critics want to lob at CEOs—to survive and remain what the delegates on the panel called the best economic system ever invented.
“If we don’t do that, we can lose,” Moynihan said. “Capitalism works. It may be screwball, it may be hard, and it may go in all different directions, but it works.”
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