Page 143 - COVID-19: The Great Reset

companies (another way to say that they adhere to the principle of
stakeholder capitalism) tend to be more resilient because of their

holistic understanding of risk management. It seems that the more
susceptible the world becomes to a broad set of macro risks and
issues, the greater the necessity to embrace stakeholder
capitalism and ESG strategies.

The debate between those who believe that stakeholder

capitalism will be sacrificed on the altar of the recovery and those
who argue that it is now time to “build back better” is far from
resolved. For every Michael O’Leary (the CEO of Ryanair) who

thinks that COVID-19 will put ESG considerations “on the back
burner for a few years”, there is a Brian Chesky (CEO of Airbnb)
who is committed to transforming his business into a “stakeholder
company”. [134] However, irrespective of anybody’s opinion about

the merits of stakeholder capitalism and ESG strategies and their
future role in the post-pandemic era, activism will make a
difference by reinforcing the trend. Social activists and many
activist investors will scrutinize closely how companies behaved

during the pandemic crisis. It is likely that the markets or the
consumers, or both, will punish those companies that performed
poorly on social issues. An essay co-written in April 2020 by Leo
Strine, an influential judge in corporate America, hammers home

this point about a necessary change in corporate governance:
“We are again paying the price for a corporate governance system
that lacks focus on financial soundness, sustainable wealth
creation and the fair treatment of workers. For too long, the stock

market’s power over our economy has grown at the expense of
other stakeholders, particularly workers. Although overall wealth
has grown, it has done so in a skewed way that is unfair to the
bulk of the American workers who are primarily responsible for

that increase. The shift toward satisfying insatiable stock market
demands has also led to increasing levels of corporate debt and
economic risk”. [135]

For activists, the decency exhibited (or not) by companies

during the crisis will be paramount. Businesses will be judged for
years to come by their actions – critically not just in a narrow
commercial sense but viewed through a broader social lens. Few

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