Redefining capitalism involves re-imagining the role of businesses in society. A shift towards ‘stakeholder capitalism’ is being witnessed, where companies are held accountable not just to shareholders, but also to employees, customers, communities, and the environment. This approach recognises the importance of societal well-being and environmental sustainability alongside profit.
A new type of company is emerging, the ‘benefit corporation’, which legally binds itself to consider stakeholder interests. Around 1,000 such corporations exist in the US, including well-known brands like Patagonia and Kickstarter. These companies are proving that profit and societal benefit can go hand in hand.
Despite this progress, many barriers to stakeholder capitalism remain. Short-termism in financial markets, insufficient government regulation, and a lack of transparency are some of the hurdles. To overcome these, companies need to adopt long-term strategies, governments must enforce stricter regulations, and transparency must be improved.
Adopting stakeholder capitalism can lead to a more sustainable and inclusive economy. It can also help companies build trust with stakeholders and achieve long-term success. This redefinition of capitalism is not just a theoretical concept but a practical solution for businesses to thrive in the 21st century.
Go to source article: http://www.mckinsey.com/insights/corporate_social_responsibility/redefining_capitalism