Introduction “If commercial endeavour isn’t for the betterment of people, which is increasingly tied to the betterment of the planet, then what is it for?” – Tamara Vrooman, President and CEO of the Vancouver International Airport Authority and Chair of the Canada Infrastructure Bank
Even though capitalism has done much to improve the quality of life of billions around the world, there is growing pressure for capitalism to be modernized so that profits, capital providers, and owners are not the overwhelming focus. Profits are evidently vital to a business. Without them, a business cannot re-invest to innovate, improve productivity, scale-up operations, grow and strengthen its workforce, provide dividends to investors, or frankly, survive. Moreover, through profits, businesses can pay taxes to help governments provide crucial services to citizens and to support important causes in their respective communities and throughout the world. Furthermore, shareholder returns play a role in enhancing economic prosperity and, in some cases, societal well-being. For instance, returns to pension plans help millions of Canadians retire with more financial security. Nevertheless, momentum is building for the purpose of the corporation to be reformed to something broader than profits for shareholders. The societal expectation is growing that businesses should link profit with purpose, creating and sharing value with stakeholders with the aim to overcome the challenges facing society and the planet. There were discussions pre-pandemic around the globe regarding how to modernize capitalism and strengthen the role of business in society. Amid efforts to overcome the challenges caused by COVID-19, the conversations about modernizing capitalism and strengthening the relationship between society and business have intensified. Many predict these conversations and movements will accelerate post-pandemic. One of the most publicized efforts as of late is the 2019 declaration of the U.S. Business Roundtable, which stated: “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”1 The statement sought to redefine the purpose of a corporation in the United States to be more considerate of the interest of other stakeholders instead of perpetuating a fixation on profits for shareholders. This business leaders’ statement came exactly a hundred years after the Michigan Supreme Court in 1919 declared that “a business corporation is organized and carried on primarily for the profit of the stockholders” and almost exactly half a century after Milton Friedman’s article in the New York Times making the case for shareholder primacy2. Perhaps even more notable, the statement was released about two decades after the same organization, the U.S. Business Roundtable, stated, “The paramount duty of management and of boards of directors is to the corporation’s stockholders… The interests of other stakeholders are relevant as a derivative of the duty to stockholders.”3 Evidently, the statement itself demonstrates that there is immense pressure for things to be different. 4
