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Companies that deliver the highest financial value and the highest value for stakeholders (customers, employees, suppliers, and their communities) also have the highest shareholder returns on average. That’s the recent finding of Bain long-term research into companies in the S&P 500. And while it won’t resolve ongoing debates about the merits of stakeholder capitalism, it does suggest that the best company strategies are those that align the ambitions and desires of stakeholders with those that create value for shareholders—and vice versa.
For more evidence, look no further than Berkshire Hathaway’s portfolio. Although Chairman Warren Buffett famously focuses on delivering for shareholders and has occasionally seemed to express skepticism about stakeholder capitalism, his public holdings are more likely to be in the top half of stakeholder value than the bottom half across this global universe of more than 1,300 companies. And one-third of his public holdings are in the top quartile for stakeholder value—a sign that even someone as relentlessly focused on shareholder value as Buffett gravitates toward companies that also deliver for stakeholders.
Financial or Stakeholder Value? For Shareholders, Both Are Best
Shareholders don’t have to choose between financial results and stakeholder happiness. Leading companies deliver both.
First published in September 2024