Corporate Sustainability

CHAPTER 1

Introduction to Shareholder Capitalism and Stakeholder Capitalism

Executive Summary

Corporate sustainability has become an economic and strategic imperative with the potential to create shared value for all stakeholders. Public companies in the United States have traditionally operated under the corporate model of “shareholder primacy/capitalism” that makes the board of directors’ fiduciary responsible primarily to shareholders with protected interests. Under the shareholder primacy system, the primary purpose of a corporation is to generate returns for shareholders, and thus corporate activities are managed toward creating shareholder value. The stakeholder primacy/capitalism, which is better known as the European corporate governance ...