It’s possible that the autocratic regime in Russia didn’t fully appreciate the power of stakeholder capitalism. In the wake of the invasion, stakeholders have clearly chosen sides—and they do not include the Kremlin. Corporations have responded, and many have decided to sever Russian ties through divestment. Shell and BP recently announced their intention to abandon their involvement in Russia. Further, Sberbank (Russia’s largest lender) says it is leaving the European banking market in the face of Western sanctions against Moscow.

The actions are a clear signal that the world is pivoting toward a stakeholder capitalism model, one that is designed to benefit all parties. Those parties include customers, suppliers, employees, shareholders, and, most importantly, communities. Stakeholder capitalism proponents argue that serving the interests of all stakeholders, as opposed to only shareholders, offers superior long-term success to businesses. Many believers assert that it is a sensible business decision, in addition to being an ethical choice.

Shareholder Primacy Vs. Stakeholder Capitalism

For decades, shareholder primacy has reigned, which is the notion that corporations are only responsible for increasing shareholder value. In that model, profits are maximized at all costs through open and free competition without deception or fraud. Put simply, corporations are solely motivated by profit potential. End of story.

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