Page 46 - Banking Finance August 2022

ARTICLE

STAKEHOLDER

CAPITALISM-

NEW NORMAL

"Stakeholder Capitalism" is making headlines in ESG factors and regulations into their business strategies
and assessment models to better manage & assess risks
economic and corporate world and the World Economic
Forum has envisioned it to be the future of trade and beyond "conventional" business & financial performance so
that better capital allocation can be done.
investment. The concept which has transformed the
purpose and goal of business and ensures that business
ESG stands for Environmental, Social & Governance
serves society at large, gained momentum after Larry' Fink's
practices being followed by an organisation. These three
(CEO Black Rock Investment) letter in 2018 to CEOs to make
aspects are mandatorily considered when investment
a positive contribution to society.
decisions are made under ESG investment concept. It is
being increasingly realised that investment decisions based
This concept propagates that usefulness of a business/
on ESG factors, in addition to financials, is advantageous for
company should be measured in terms of well-being of all
investors in the long term towards achieving sustain ability
stakeholders. There is a growing social movement to rethink
and value creation.
capitalism. The investors too are throwing their weight
around the theory of stakeholder capitalism to drive long
Further "Environmental, Social and Governance (ESG)" factors
term value creation and sustainable growth by integrating
are attracting serious attention of all stakeholders i.e.
governments, regulators, investors, lenders and corporates
About the author and this will transform not only investment and its
management landscape, but it has potential to bring about
Ajay Chandra Pandey attitudinal change in corporates towards business goals and
AGM and Faculty
objectives. This also ensures adoption of comprehensive risk
SBICRM, Gurugram
management practices on the part of the corporates.
46 | 2022 | AUGUST | BANKING FINANCE