ESM Feb. 20, 2023 Weekly Newsletter

Here's a compilation of news and insights from the Enterprise Engagement Alliance's ESM at EnterpriseEngagement.org media platform.

Brand Engagement 360 Table of Contents for ANA Knowledge Center

The Enterprise Engagement Alliance’s ESM media has created a complete library on brand engagement as part of the Enterprise Engagement Alliance’s sponsorship of an Association of National Advertisers Knowledge Center of Brand Engagement 360, the application of stakeholder management principles to marketing to ensure brand purpose alignment across the organization for more sustainable results.

?Click here for a complete guide to Brand Engagement 360 and its application in marketing.

Kenan Study: Stakeholder Capitalism Cannot Jettison Profit Maximization

A year-long analysis of Stakeholder Capitalism by a think tank dedicated to finding “market-based solutions to vital economic issues” finds that “non-pecuniary” investor interests can put a “premium” on the valuation of organizations focused on ESG (Environmental, Social, Governance).

Demonstrating the increasing attention on the concept of Stakeholder Capitalism, the Frank Hawkins Kenan Institute of Private Enterprise has issued a report and model for Stakeholder Capitalism. ?The model concludes that profit maximization remains a goal in Stakeholder Capitalism but that profits can also be measured by long term valuation premiums for ESG-oriented companies as well as short-term cash flow.

The study asserts that the tradeoffs involved with a stakeholder approach to management are simply too great to displace the traditional profit/value creation model.

The Enterprise Engagement Alliance would argue that an organization with a clear purpose and “North star” has an equal framework against which to make the difficult tradeoff decisions that equally occur in both stakeholder and shareholder capitalism.

?If You Don’t Like Unions, Blame Shareholders Capitalists…

This is what happens when companies focus on the short-term at the expense of creating sustainable wealth.

Why would employees form unions and threaten strikes if they felt a sense of ownership and pride in the company, had a seat at the table, with adequate pay and benefits and the potential for growth, if desired.

Have you heard of any successful union organizing efforts at companies like Chick-fil-A Restaurants or Wegmans Food Markets ’s.?Yes, a few 苹果 retail stores have voted for unions, but there’s no sign of serious interest in unions there either.

Unions were formed because most early industrialists treated workers as nothing more than a commodity whose cost should be relentlessly minimized.

Despite working conditions that would be considered terrible in our day, the robber baron John D. Rockefeller’s Standard Oil Company did not have one strike during his reign, even during times of intense labor strife.

Rockefeller was known to frequently recognize employees and even work side by side to motivate them on big projects.

Compared with most CEOs during this time, he knew that companies needed to provide adequate pay, housing, and downtime in order to achieve the highest productivity and quality.

In a classic case of kharma, the early actions of industrialist CEOs have now come back to haunt this generation: unions have become a business on to themselves whose business model is based on organizing workers, in many cases sowing distrust against well-meaning companies because that’s the only way to win votes.

So, by perennially mistreating employees, shareholder capitalists kicked the cost down the road so that now today’s companies must pay the price by having to do battle with the very people whose work they depend upon to be efficient and effective.

First Southwest Airlines Fiasco, Now Norfolk Southern —How a Shareholder Focus Hurts Shareholders and Stakeholders Redux....

Earlier this year, we learned that Southwest Airlines spent huge amounts buying back share to help shareholders knowing full well that it’s technology was a ticking time bomb.

Now we learn that Norfolk Southern did the same: paid enormous dividends to shareholders (and lobbyists to oppose safety regulations), while the Palatine disaster is facts on the ground that whatever the company invested in safety was insufficient.

Of course the companies are going to claim that the stock buybacks had nothing to do with this failure to invest in critical infrastructure. If it quacks like a duck and looks like a duck, it’s a duck.

This is what happens when companies put the short-term interests of shareholders of stock-holding management above the interests of all stakeholders: both people and investors get hurt.

Click here for the full report in the 纽约时报 by Peter Eavis .

As Stakeholder Capitalism Creeps Into General Media Coverage, More People Focus on the Right Message: “It’s Just Better Business.”

Mark McNees, Entrepreneur in Residence at?Florida State University - College of Arts and Sciences, writes in the?Tallahassee Democrat, “Capitalism by any other name, Stakeholder, Conscious, or Woke is still capitalism.?Larry Fink?(Chairperson and CEO of?BlackRock) wrote in his annual letter that Stakeholder Capitalism 'is not about politics. It is not a social or ideological agenda. It is not 'woke.' It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.'"

In reporting for?ABC News,?Max Zahn?quotes?Alison Taylor, a Professor of Business at?New York University, who focuses on corporate responsibility and ethics, “For decades, prevailing corporate wisdom held that companies face a choice between actions that are socially beneficial and ones that maximize shareholder value...#ESG, by contrast, is an approach to investing that examines a company's social or environmental impact precisely because it considers non-financial information useful for determining whether the company would deliver strong investor returns...The business would do good for the world and make more money."

This discussion is old news to long-term academics and business practitioners many of whom were surprised to see it conflated with?#corporatesocialresponsibility, but refreshing to read in the general media.

Click for the full stories in the Tallahassee Democrat and ABC News.

Best Way to Fight ESG Opponents? Stop Playing Heros and Focus on the Business Benefits of Having Highly Engaged Stakeholders and Lower Risks....

Fortune ’s Alan Murray reports today that the business executives he knows are largely moving ahead with ESG plans despite growing opposition from right-wing organizations accusing investment companies of promoting social issues by pressuring companies on fossil fuels, diversity, equity, and inclusion, etc.

Reporting on a meeting held under Chatham House rules with leading executives, he writes, “Some of the participants believe that ESG rankings and ratings have taken the #ESG effort in the wrong direction, making it a kind of check-the-box, scorecard exercise. They argue instead that companies should focus on policies that are closely tied to their own business and clearly designed to help their business sustain itself in the future. Taking care of the communities you operate in helps ensure those communities will allow you to operate in the future. Recruiting and retaining a diverse workforce is essential to acquiring the best talent in a labor-constrained world. And focusing on how your company can meaningfully contribute to the climate transition is a way to create value in a business world that is clearly committed to that transition.”

He concludes: “In short, companies need to do a better job making it clear this is not about politics; it’s about good, long-term business.”