Stakeholder Capitalism: The Case For and Against

Stakeholder Capitalism: The Case For and Against

The virtual event was hosted by London Business School’s Centre for Corporate Governance, in partnership with the Program on Corporate Governance, Harvard Law School and ECGI.

About the event

As part of the ECGI’s recent series of events on the topic, this debate by two ECGI Fellows, Alex Edmans (LBS) and Lucian Bebchuk (Harvard Law School) explored in-depth views on stakeholder capitalism, providing an opportunity to gain different perspectives on this widely debated issue. Professor Edmans presented the case for corporate leaders serving goals other than shareholder value, and Professor Bebchuk questioned this approach. They challenged each other on their positions. Gillian Tett (Financial Times) moderated the debate and Q&A.


Alex Edmans, Professor of Finance and Academic Director, Centre for Corporate Governance, London Business School, ECGI Fellow and author of “Grow the Pie: How Great Companies Deliver Both Purpose and Profit”

Lucian Bebchuk, James Barr Ames Professor of Law, Economics, and Finance, and Director of the Program on Corporate Governance, Harvard Law School, ECGI Fellow and co-author of “The Illusory Promise of Corporate Governance” and “For Whom Corporate Leaders Bargain.”


Gillian Tett, Chair of the Editorial Board and Editor-at-Large (US) of the Financial Times, and Co-Founder of FT Moral Money


ECGI Series on Corporate Purpose

Should corporate leaders manage their business for all their stakeholders, or should shareholders’ interests come first?

This has remained the primary question since the Business Roundtable adopted a new statement on the purpose of the corporation declaring its commitment to lead their companies for the benefit of all stakeholders. Many prominent ECGI Fellows and research members have contributed to this dialogue, including Oliver Hart (Harvard University), Luigi Zingales (Chicago Booth School of Business), Colin Mayer (University of Oxford), Edward Rock (NYU Law), Jennifer Hill (Monash University), Jill Fisch (Penn Law), Steven Davidoff Solomon (Berkeley) and others. A conference dedicated to the topic of Corporate Purpose was co-organised by ECGI and hosted by IESE Business School in October 2020. Lucian Bebchuk (Harvard Law School) has presented work that has challenged popular opinion in several forums, including the University of Oxford organised debate with Colin Mayer in June 2020 and most recently, in September 2020, at the Chicago Booth School of Business online event. Alex Edmans (LBS) argued against some of these views at this event which opened an opportunity to elaborate on this engagement in the debate that is now scheduled. Alex has presented his views at many events and forums, having published a book which addresses the subject. This dialogue demonstrates the meaningful contribution of evidenced-based research and expert insight into an otherwise speculative debate. ECGI will continue to collect resources and make them available on the ECGI website. Below are some of the materials currently available. Interested parties will have an opportunity to pose questions to the speakers at the debate on 10th December 2020.

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Sustainability Reporting

Sustainability Reporting

The livestream of this event is available here:

You can download the event programme here

About the event

The IFRS Foundation has launched a public consultation on a global approach to sustainability reporting and on the possible role of the Foundation. They have published a consultation paperStandardisation and comparability of reporting are critical for capital markets, but also for (empirical) research in accounting, law, finance, economics and related disciplines on sustainability.

The European Corporate Governance Institute (ECGI) and the Impact Economy Foundation organised a workshop to discuss the consultation document. The workshop began with an economic analysis of sustainability reporting. The economic consequences, such as capital market effects and real effects in firm behaviour, were highlighted. Then, the workshop reviewed examples of companies that are already providing sustainability reporting on a voluntary basis, and asked: what are the benefits and costs?

The workshop then moved to panel discussions centred on the consultation questions. High-level policy makers, academics and practitioners discussed the consultation questions. The key issues included: standardisation; mandatory vs voluntary reporting; climate change only or other environmental topics such as biodiversity loss also; and single materiality (impact on company’s financial value) or double materiality (impact on financial value as well as impact of company on social and environmental value). The workshop delivered new insights to the IFRS Foundation on these issues as well as inspiration to academics to pursue research in this emerging area, with sustainability now high on the agenda of governments and companies.

Useful links:

Workshop Registration:

IFRS Consultation document:

All Public Responses to the Consultation:

Joint statement of support from the UK government and financial regulators:

Hans Christensen, Luzi Hail, Christian Leuz (2019) Adoption of CSR and Sustainability Reporting Standards: Economic Analysis and Review

Commentary from BlackRock:

Submission by Federated Hermes

Open letter from Professors at Saïd Business School, University of Oxford:

Article by Bob Eccles & Tim Mohin: We mustn’t miss this crucial moment to create a global Sustainability Standards Board

Article by Richard Barker and Bob Eccles: Investors need to get behind materiality

Article by Bob Eccles and Michael Krzus:

Article by Janine Guillot, CEO, SASB:

Harvard Business Review article “The Future of ESG Is…Accounting?” by Richard Barker, George Serafeim and Bob Eccles

Submission from the UK Financial Conduct Authority:

Statement from Deloitte:

Article by Teresa Ko (IFRS Trustee):

Article by Integrated Reporting:

ESMA response to the IFRS Consultation (16 Dec 2020)

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Trading and Shareholder Democracy

Trading and Shareholder Democracy

The third seminar in the ECGI Spotlight Series took place on 16 November 2020 at 16:00 CET (10:00 EST).

You can download the working paper here.


The authors study shareholder voting in a model in which trading affects the composition of the shareholder base. Trading and voting are complementary, which gives rise to self-fulfilling expectations about proposal acceptance and multiple equilibria. Prices and shareholder welfare can move in opposite directions, so the former may be an invalid proxy for the latter. Increasing liquidity can reduce welfare, because it allows extreme shareholders to gain more weight in voting. Delegating decision-making to the board can improve shareholder value. However, the optimal board is biased, does not represent current shareholders, and may not garner support from the majority of shareholders.

The ECGI Spotlight Series is a global online seminar programme highlighting chosen papers from the ECGI Working Paper Series.


Spotlight Team:
Mike Burkart (Editor) | Miriam Schwartz-Ziv | Amir Licht (Editor) | Tom Vos


Supported by


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Directors’ Duties and Sustainable Corporate Governance

The videos are available here

The programme can be downloaded here.

About this workshop

The European Commission recently published a study by Ernst & Young (EY) on directors’ duties and sustainable corporate governance commissioned in 2019. Studies of this type are usually a stepping stone for policy proposals that will be put forward for consideration by EU Member States and the European Parliament. In the words of the Commission:

“the Study found a clear trend of short-termism in the focus of EU companies. It identified key drivers of this issue, ranging from the narrow interpretation of directors duties and the company’s interest with the tendency to favour the short-term maximisation of financial value, through growing pressure from investors and the lack of a strategic perspective on sustainability all the way to the limited enforcement of the directors’ duty to act in the long-term interest of company. In order to lengthen the time horizon in corporate decision-making and to promote a corporate governance that is more conducive to sustainability, the Study also identified specific objectives that EU intervention could aim to reach”.

The study identifies a number of policy options for the European Commission to consider (summarised at pp. 51-60), which may deeply impact corporate law and governance across the European Union. Topics include directors’ duties, the company’s purpose, corporate disclosures, executive compensation, and engagement with stakeholders. The European Commission has conducted a public consultation on these policy options, that closed on 8 October 2020, and is expected to issue proposals at the beginning of 2021, if not earlier.

ECGI held an online roundtable to discuss the report, the academic literature, and recommendations on the topics referenced in the report.

Useful links:

Watch recordings of the workshop | Summary article | Summary Report

EY Report:
All Public Responses to the Consultation:
Submitted Response from Wolf-Georg Ringe:
Submitted Response from Paul Davies and Rolf Skog (ECLE group):
Submitted Response from Mark Roe and Holger Spamann:
Submitted Response from Alex Edmans:
Submitted Response from Steen Thomsen: and

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Can Purpose Deliver Better Corporate Governance?

Can Purpose Deliver Better Corporate Governance?


John Almandoz, IESE; Marco Becht, Solvay Brussels School and ECGI; Jordi Canals, IESE; Fabrizio Ferraro, IESE; Mireia Giné, IESE and ECGI; Colin Mayer, University of Oxford and ECGI; Joan Enric Ricart, IESE; Paola Sapienza, Kellogg School of Management and ECGI.

About this event

The notion that companies should have a corporate purpose or mission that goes beyond financial performance has been considered in the fields of management, organisational behaviour, law and the economics of organisations for a long time. But the increasing weight of ESG dimensions in corporate governance and asset management, the call for positive societal impact, and the competition to attract and retain top talent -among other factors- draws us firmly closer to a deeper consideration of corporate purpose. At this turbulent time, ‘Corporate Purpose’ has galvanised a global movement that promises to restore trust in companies, to produce goods and services without doing harm, while providing a fair return to employees and shareholders.

Many of the world’s most valuable companies already have a clear purpose. With a swelling of public discourse, the markets have joined the movement calling on businesses to make a positive contribution to society and to refocus corporate governance around a multi-stakeholder perspective. As businesses in turn, reflect on their purpose, they must also consider the questions that complicate the implementation of a vision or purpose and make it meaningful.

This conference focused on the connection between purpose and governance. It brought together leading scholars, including Nobel Laureate Bengt Holmström, from the fields of strategy, organisational theory, organisational economics, finance and corporate law to address these important questions with thoughtful business executives, corporate lawyers, asset managers and board directors from a variety of sectors. The event encouraged a dynamic interaction between scholars and corporate leaders.


For queries, please contact Félix Sánchez, IESE CCG Manager:


John Almandoz (IESE); Marco Becht (Solvay Brussels School, ECGI and CEPR); Patrick Bolton (Columbia University and ECGI); Jordi Canals (IESE); Fabrizio Ferraro (IESE); Jill E. Fisch (University of Pennsylvania Law School and ECGI); Caroline Flammer(Boston University’s Questrom School of Business); Claudine Gartenberg (The Wharton School at the University of Pennsylvania); Mireia Giné (IESE and ECGI); Jordi Gual (CaixaBank); Rebecca Henderson (Harvard Business School); Bengt Holmström (MIT and ECGI);  Sophie L’Hélias (LeaderXXChange and ICGN); Baroness Denise Kingsmill (Inditex and IAG) ; Juvencio Maeztu (CEO of IKEA); Colin Mayer (Saïd Business School, University of Oxford, British Academy and ECGI); Paul Polman (former CEO of Unilever); Joan Enric Ricart (IESE); Henry Tricks (The Economist); José Viñals (Chair, Standard Chartered); Xavier Vives (IESE Business School and ECGI); Ernst-Ludwig von Thadden (University of Mannheim and ECGI); Luigi Zingales (University of Chicago Booth School of Business and ECGI)

Supported by:

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Rethinking Stewardship

Rethinking Stewardship

The live stream of the event is available to watch on YouTube:

About this event

The reconcentration of share ownership into the hands of a small number of institutional investors holding broadly diversified portfolios has led to calls for adoption of a particular corporate governance stance by these investors, “stewardship.”  Indeed, many jurisdictions, following the lead of the UK, have adopted stewardship codes into their regulatory framework.  “Stewardship” has generally been taken to mean engagement with portfolio companies in view of long term shareholder interests, though some have argued for a broader conception of stewardship obligations. Since companies are likely to be responsive to the convictions of their largest shareholders, one especially important question is how particular models of stewardship will affect the way that public companies frame and address the ESG issues now urged upon them.

The goal of the conference was to examine this conception of stewardship for its “fit” with current practices of institutional investors, the “products” that asset managers offer to beneficial owners, and the diverse patterns of ownership and economic development throughout the world.  In short, the goal was to “Re-Think Stewardship.”

Prof. Lucian Bebchuk (Harvard Law School and ECGI) argued that a particularly important class of institutional investors, index funds, significantly underinvest in stewardship, and are excessively deferential to corporate managers, relative to what would best serve the interests of the funds’ beneficial investors.

Prof. Jeffrey Gordon (Columbia Law School and ECGI) presented an alternative conception of stewardship, “systematic stewardship,” appropriate for maximally diversified investors, based on the distinction in Modern Portfolio Theory between idiosyncratic and systematic risk. Thus institutional investors can take up issues like climate change, which affect the level of systematic risk, consistent with a finance rationale of trying to achieve the best risk-adjusted return for their investors.

Prof. Dionysia Katelouzou (King’s College London) presented the findings from her empirical analysis of the rhetoric of stewardship by activist hedge funds in the UK, which uses the novel method of automated content analysis, and she contended that we can learn a lot from the UK stewardship model especially when institutional investors dominate the public equity market. Prof. Dan Puchniak, (National University of Singapore) then contended that the relative weakness of institutional investors and dominance of controlling shareholders in non-Anglo-American jurisdictions makes the widespread transplant of UK-style stewardship codes a “global legal misfit” – resulting in stewardship functioning in diverse and unanticipated ways around the world.

Chief Justice (ret) Leo Strine (Delaware Supreme Court) delivered a keynote address that addressed stewardship both from the doctrinal perspective of a judge and a view of the role of institutional investors in promoting fair and sustainable capitalism.

The papers were discussed by panelists from globally significant asset managers, legal scholars and other researchers, and corporate governance practitioners.


Ira M. Millstein Center for Global Markets and Corporate Ownership, Columbia Law School

European Corporate Governance Institute (ECGI)

Center for Law and Economic Studies, Columbia Law School


You can download the event programme here

Reading material can be downloaded here


Programme queries should be directed to Jeff Gordon (

Supported by:


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