Enlightened Investors Recognise the Shareholder v Stakeholder Debate is a False Dichotomy

“Tesco under fire for lack of action on obesity crisis” is the title of an article in the Financial Times today. “Shareholders call on supermarket chain to set targets for increasing healthy food sales”, reads the subtitle.

The article records that an enlightened group of shareholders “called on Tesco to develop a strategy to significantly increase healthy food sales by 2030 and publish an annual review of progress from 2022 onwards.” Their concern is that “consumer trends to buy healthier products and government efforts to combat obesity could pose a financial risk to Tesco if it does not take action.” The investors also call out Tesco as a laggard when compared to their major rivals.

Such action by a small group of investors targeting a company that controls 27% of the UK Grocery Market is already having an impact. The company has already acted, just not fast enough in the eyes of some investors. Tesco is reported to have said it is “working hard to make it easy for our customers to make healthy choices” and set “very clear” targets on health and sustainability. It also said its reformulation programme had removed “more than 50 billion calories” since 2018, and that it offered healthier alternatives, gave away free fruit for children, and was aiming to increase sales of meat alternatives by 300 per cent by 2025, the first retailer to set such a target.

This very short article lends weight to my argument, that the long-running arguments over whose interests a business should serve - shareholders v stakeholders - is premised on an entirely false dichotomy.

This case highlights the fact that all interests would be best served, except perhaps short-term share traders, if Tesco is run to strengthen the company itself, its brand and its reputation.

The enlightened long-term shareholders in this example clearly recognise the long-term success of the business, and their own interests in it, are best served by creating value in a way that is best for customers and society.

Being managed for the long-term success of the business is also in the interests of suppliers and employees, who can also be proud of their association with a company that creates value in ethical and responsible ways.

I suspect your response will be, “yes, of course”. To that my response is, then why has the “shareholder v stakeholder” debate rumbled on for more than half a century, and isn’t it about time we ended this nonsense debate?”

To try and put an end to it is the reason I decided to organise a conference “Beyond the False Dichotomy: Ending the Shareholder v Stakeholder Nonsense”. Due to the level of interest and the scale and scope of the debate in part, and the time limitation that is tolerable for online events in part, the initial conference will now be offered as a series of four half-day conferences.

Four half-day events may seem excessive to you if you responded “yes, of course,” the dichotomy is false, but a significant number with a vested interest in the status quo are yet to be convinced. Additionally, rhetoric in the form of relatively recent statements by the likes of the Business Round Table and the World Economic Forum who now recognise the debate is nonsense, has yet to translate into any real change in practices.

We need to ensure support for change is strong by explaining how a false narrative created the false dichotomy, and by explaining the damage it does. In this way, we should gain support for the argument a new narrative is needed. This will be the purpose of the first conference, Beyond the False Dichotomy: Ending the Shareholder v Stakeholder Nonsense on March 15th. We will also explore why it is a false dichotomy, born of a narrative that came to dominate, and how this happened. 

Once it is established, that we need to move beyond the false dichotomy, we will need to determine what the new narrative should be. We will also need to ensure it is widely understood and accepted. Exploring what the new narrative should be and how to achieve these objectives will be the focus of the second conference, Beyond the False Dichotomy: Shifting the Narrative on May 17th.

To fix the damage caused by the false dichotomy and the old narrative, a new narrative will need to be accompanied by a clear understanding of what needs to change and how to cultivate the changes the new narrative will stimulate. Beyond the False Dichotomy: Cultivating Changes on July 12th will be the focus of the third conference.

To ensure the shift is long-lasting and will lead to sustainable widely shared prosperity measured in terms of human flourishing and wellbeing, the focus of the final conference will be Beyond the False Dichotomy: Lessons in Longevity and Stewardship on September 20th. The lessons will come from companies that are managed for long-term success that have been able to achieve long-term success.

The programme of conferences is supported by a WEBSITE. And a LINKEDIN GROUP to support discussion has just been created.

For the first conference we have a fantastic line-up of speakers:

The speakers include experts in investment, corporate governance, economics, business consulting and think tanks, plus one of the world’s most successful former CEOs, now Chairman of the Novo Nordisk Foundation, Lars Rebien S?rensen.

The event will take place on March 15th from 2-6.30pm GMT.

TICKETS are available for just ￡10.