We need to build an economy that can see past the pressure to understand value-creation in narrow and short-run financial terms, and instead envision a future worth investing in for the long-term.
The definition of value provided by shareholders-driven finance is incomplete and results in resource misallocation with bad implications for investment, innovation, and workers.
The business trend is clear: Anyone planning to be competitive in the coming decade must have an authentic commitment to purpose and to upend shareholder primacy, or risk being left behind.
The Natura acquisition of Avon is the latest in a series of events signaling growing interest among multinationals and publicly traded companies in upending shareholder primacy by building the global B Corp movement.
According to “American Investment in the 21st Century” the shareholder primacy theory has tilted business decision-making toward delivering returns quickly and predictable to investors, rather than building long-term capabilities through investment and production… does not properly understand how business invest in innovation…and has resulted in a diminished understanding of the role workers play and the risk they undertake in the value creation process”
Unlike traditional corporate governance that requires maximization of profit above all else, benefit corporation (B Corp) governance expands the fiduciary duty of directors to balance the interest of all stakeholders, not just shareholders – New Business Trend: An Authentic Commitment To Purpose
A purpose-first business are increasingly seen as conductive to the creation of shareholder value, now is recognized more and more that an authentic commitment to purpose does not detract from shareholder returns, but is in fact necessary to ensure them.
What do you think about B Corp as a business trend?
