The European Corporate Governance Institute (ECGI), known globally for its academic credentials, published the first in a series of articles today on ‘Responsible Capitalism’. It opens a research debate that seeks to explore the tension between the beneficial outcomes of capitalism, and the unequal consequences which are not aligned with democratic societies and the future of the planet. The concept is defined by ECGI as ‘an economic system that accommodates private ownership and the pursuit of market opportunities while achieving societal goals’.
The first article, “Capitalism’s shortcomings” by Herman Daems, ECGI Chair and Chair of the Board of BNP Paribas Fortis, affirms that “stimulating capitalism to act more responsibly is an effective way to make markets, companies and governments respond to today’s ESG challenges while safeguarding creativity, innovation, and climate-compatible growth.” Professor Daems has long advocated for businesses to act responsibly (Coalition for Inclusive Capitalism, 2015) and will oversee the direction of the Institute, as Chair for the coming years.
The second article, by René Stulz, ECGI Fellow and the Everett D. Reese Chair of Banking and Monetary Economics and the Director of the Dice Center for Research in Financial Economics at the Ohio State University, provocatively asks “Can capitalism be responsible?”. Professor Stulz argues that an “economy with a well-functioning price system with the right kind of taxes and restrictions and where managers follow Friedman’s dictum that firms should maximize shareholder wealth will likely achieve a more responsible outcome than one where some investors and managers (but not others) try to achieve responsible outcomes.”
The third article, by Jennifer G. Hill, ECGI research member and the Bob Baxt AO Chair in Corporate and Commercial Law, Monash Law School, Australia, explores “The journey from corporate rights to corporate responsibilities”, usefully concluding that “growing calls for ‘responsible capitalism’ serve as a reminder that corporate governance is not static; nor is it exclusively a private law problem about misalignment of interests between shareholders and managers.”
The articles were published on the new ECGI Blog which was announced by the Institute last week, under the leadership of Professors Wei Jiang (Columbia Business School and ECGI) and Dan Puchniak (National University of Singapore and ECGI). Future issue's will continue on the theme, with opinions and recommendations from Professor Mark Roe (Harvard University and ECGI), Ron Gilson (Stanford University, Columbia Law and ECGI) and and Paul Davies (University of Oxford and ECGI). The Blog will not only feature views from academics, but also from experienced business leaders. Michele Crisostomo (Chair, Enel) will be among those interviewed on the topic. The interview, which will feature in the initial series, is conducted by Professor Guido Ferrarini (University fo Genoa and ECGI).
The launch of the new Blog platform facilitates more timely scholarly reflection without the often long lead-in time and caveated restrictions associated with the publication of academic research. This will complement the already successful ECGI Working Paper Series which is a reliable source of knowledge pertaining to the ecosystem and governance of the corporation, relating to law, finance and economics.
The ECGI Blog will focus on selected themes with global interest and will spotlight a new theme every two months.
Professor Marco Becht