The Role of Stakeholders
The Role of Stakeholders
October 2000
Olivier Frémond
The recent history of the stakeholder debate has highlighted the perceived rivalry between the shareholder model versus the stakeholder model:
•Shareholder model - the purpose of the corporation is to promote shareholder value
•Stakeholder model - the purpose of the corporation is to serve a wider range of interests
1
The role of stakeholders
Good corporate governance helps… to ensure
Good
that corporations take into account the interests of a wide range of constituencies, as well as of the communities within which they operate, and that their boards are accountable to the company and the shareholders. This, in turn, helps to assure that corporations operate for the benefit of society as a whole.
-Preface, OECD Principles of Corporate Governance (1999)
-Preface, OECD
(1999)
(OECD quote paraphrased: CG ensures that interests of many constituents are taken into account. This helps to assure that corporations operate for the benefit of society as a whole.)
•Now we see that this debate is over a false dichotomy
•The debate has moved on as the perspective outlined in the OECD principles has gained in prevalence. OECD member countries include both shareholder and stakeholder models of corporate governance so this consensus is important
•Stakeholders and shareholders alike are searching for methods of ensuring the long term health and prosperity of the company
•We still may debate what the best system for promoting the long term health of the company may be, just as we may still debate who exactly the stakeholders are
2
Definitions vary s s s s s s s s s Employees
Shareholders
Management
Creditors
Trade unions
Customers
Suppliers
The local community
Future generations
•Employees: There is widespread agreement that they are a prime stakeholder
•Shareholders: Some would say that shareholders are the first stakeholder
•Management: Controversial,
October 2000
Olivier Frémond
The recent history of the stakeholder debate has highlighted the perceived rivalry between the shareholder model versus the stakeholder model:
•Shareholder model - the purpose of the corporation is to promote shareholder value
•Stakeholder model - the purpose of the corporation is to serve a wider range of interests
1
The role of stakeholders
Good corporate governance helps… to ensure
Good
that corporations take into account the interests of a wide range of constituencies, as well as of the communities within which they operate, and that their boards are accountable to the company and the shareholders. This, in turn, helps to assure that corporations operate for the benefit of society as a whole.
-Preface, OECD Principles of Corporate Governance (1999)
-Preface, OECD
(1999)
(OECD quote paraphrased: CG ensures that interests of many constituents are taken into account. This helps to assure that corporations operate for the benefit of society as a whole.)
•Now we see that this debate is over a false dichotomy
•The debate has moved on as the perspective outlined in the OECD principles has gained in prevalence. OECD member countries include both shareholder and stakeholder models of corporate governance so this consensus is important
•Stakeholders and shareholders alike are searching for methods of ensuring the long term health and prosperity of the company
•We still may debate what the best system for promoting the long term health of the company may be, just as we may still debate who exactly the stakeholders are
2
Definitions vary s s s s s s s s s Employees
Shareholders
Management
Creditors
Trade unions
Customers
Suppliers
The local community
Future generations
•Employees: There is widespread agreement that they are a prime stakeholder
•Shareholders: Some would say that shareholders are the first stakeholder
•Management: Controversial,