Published April 28, 2025 in Governance • 8 min read • 
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In 2019, Emmanuel Faber, then Chair and CEO of Danone, was considered a trusted leader for turning Danone into an “enterprise à mission” – a new corporate structure in France, similar to a B-Corp in the US – which allowed companies to include in their legal charter nonfinancial goals, like social and environmental impacts. Under his leadership, Danone divested unhealthy food products, increased the use of recycled packaging, pledged to achieve net zero, and launched a regenerative agriculture program.
Despite these ambitions, by 2021, Faber had lost the trust of his shareholders, who argued that his social and environmental agenda was creating a drag on Danone’s financial performance, making the company less competitive. His well-publicized ouster highlights the difficulties of running a company: how to balance social, environmental, and financial goals without losing the trust of capital markets?
Lately, ESG criteria have come under attack. In the current political climate, is it possible, in the words of Oxford academic and author Colin Mayer, to restore trust in a broken corporate system, which increasingly profits from creating problems for people and the planet rather than seeking to solve them?
In my book, Confiar no tiene precio (Trust is priceless), I draw upon my experience as Chairman of CaixaBank (Spain) between 2016 and 2021 to explore how the current questioning of capitalism and democracy has its roots in a loss of trust between economic and social actors. For the macroeconomy to work, we need to restore trust at the level of our enterprises – from our vision of the firm and investment orientation to our ownership structures and corporate cultures.
It’s important to understand three philosophies underpinning how firms operate today. The first is the “classical liberal” approach, which insists that a company’s sole focus should be maximizing financial performance. Although it acknowledges the need for some regulatory framework to guarantee “the rules of the game”, it views the responsibility of public authorities and other regulatory bodies as providing public services with minimal interference in the functioning of the free market.
The second approach may be called “enlightened capitalism”. Here, companies adopt a more holistic view of profitability, incorporating the interests of other stakeholders beyond their shareholders. Followers of this approach recognize that social and environmental considerations can also contribute to the business’s long-term success. However, when a direct conflict arises between maximizing profits and pursuing social or environmental goals, the company will prioritize financial returns over nonfinancial objectives.
Finally, we have companies following the “stakeholder approach”, introduced in the 1980s by the American business philosopher Edward Freeman. Under this approach, businesses seek to maximize value creation – not just financial but also social and environmental – for all stakeholders, including customers, suppliers, employees, investors, and local communities. Stakeholder companies must balance these often-conflicting interests while ensuring long-term financial viability since a failed company creates value for no one. The company can maximize its impact overall by successfully creating value for a diversified group of stakeholders.
This is the approach that corporate leaders like Faber have tried to pursue. The question is whether such a company can be viable and competitive – and whether such an approach can restore the trust in the corporate world that seems to be lacking today.
Economic viability requires a company to produce enough profit to meet investor expectations, typically by covering the cost of equity with a risk premium. However, this does not mean that all the value generated must be captured by investors alone.
At first glance, distributing the value created among several different stakeholders might appear to hurt a company’s competitiveness. For example, ethically sourcing raw materials, reducing emissions, and ensuring living wages throughout the value chain will bring higher costs. However, a stakeholder company generates competitive advantages in other ways. For example, building strong, loyal relationships with customers, suppliers, and employees increases the chances they will remain with the company for a long time, developing important company-specific experience that reaps dividends in the long run.
Despite these potential benefits, the bottom-line impact of including social and environmental goals remains a matter of debate. Some authors (like Eccles and Klimenko) find a positive correlation between financial results and ESG metrics; however, it might be that successful companies just have more potential for having a good impact. This lack of clear causality leads other authors (like Porter, Serafim and Kramer) to recommend only focusing on ESG areas that can improve a company’s competitive positioning; actions that drive only reputational gains are not enough. The issue is further complicated by the lack of standardized ESG metrics to measure impact across companies and sectors.
Where there is more conclusive evidence of successful companies that have adopted a stakeholder approach, it often applies to a specific subset of corporations – as in the case of Danish industrial companies wholly or majority-owned by long-term investors, such as family owners or foundations.
It is crucial to clarify what makes these firms special. Family ownership, by definition, takes a multigenerational view, which constitutes a form of “patient” capital – that is, fewer risky investments, more R&D, and longer-term payoffs, where business continuity is a primary concern. Their growth may be slower, but their financial results are less volatile. Their reputation tends to be higher since their stakeholder “contracts” are more stable, even in challenging times.
For these types of firms, they are wise enough to realize, as the economist Joseph Stiglitz observed, that for every CEO who wants to do the right thing, there are plenty more who don’t. So, stakeholder firms seek markets where they can differentiate themselves – and build trust, based on the greater attention they pay to their social and environmental impacts, satisfying the interests of multiple stakeholders and benefiting from the trusted relationships they cultivate with those stakeholder groups over time.
“Mars is proof that a large corporation can have a positive social and environmental impact while remaining profitable. However, it requires an ownership structure and a personal commitment from its leaders, management team, and board of directors.”
If stakeholder-driven companies are financially viable and competitive, why do they remain the exception rather than the rule? And why has there been a backlash against the “stakeholder view” of the firm? I can point to several reasons.
First, corporate regulations often limit the discretion that directors can exercise when considering interests other than those of the company’s shareholders. Alternative corporate structures, like public benefit corporations, have had limited adoption, and their effectiveness, as mentioned, is still under debate. As Faber’s ousting proved, most companies prioritize their shareholders when push comes to shove.
Second, it is easier to adopt a stakeholder approach when a single shareholder with a majority or controlling stake can steer the vision. Without that, a dispersed capital structure makes achieving the kind of consensus needed to execute a long-term vision harder. Instead, the company’s vision and strategy are left to managers who are often incentivized to achieve short-term (quarterly) results.
Third, the nature of the shareholders plays a role. Those with long-term investment horizons (as in family-owned firms or foundations) will be more inclined to support long-term strategies. However, when the capital structure within the same firm is shared between investors with divergent time horizons – for example, pension funds with a focus on steady growth versus private equity – it becomes practically impossible to reach a consensus.
Corporate governance should not create barriers to stakeholder-oriented approaches.
Other factors include the company’s culture and traditions. How are board members chosen? Are shareholders with long-term or short-term horizons prioritized in board appointments? Are corporate regulations and best practices designed to protect minority shareholders from majority control or, in the case of dispersed ownership, to ensure executives remain accountable to all investors? Traditional shareholder-driven firms do not always operate under the same dynamics as stakeholder companies, where a majority owner also prioritizes the interests of non-shareholders.
Corporate governance should not create barriers to stakeholder-oriented approaches. Rather, to build trust, it is necessary to find ownership structures that strike a fair balance between shareholder and stakeholder concerns, not penalizing one or the other but arriving at a desirable level of diversity that supports the ecosystem on which a business depends.
I’ll conclude with an optimistic example of a food company that has built trust through a stakeholder orientation: Mars Inc., famous for M&M’s, Snickers, and Mars bars. Privately held by the Mars family for over 100 years, the company has long operated according to five principles: quality, responsibility, mutuality, efficiency, and freedom. The company states: “It is our independent family ownership that gives us the freedom to think in generations, not quarters, so we can invest in the long-term future of our business, our people, and the planet.”
This culture results in low employee turnover, and its decentralized structure encourages personal autonomy and ethical behavior. In December 2024, it announced plans only to use responsibly sourced cocoa in its supply chain by 2030. Additionally, Mars actively supports regenerative agriculture and has pledged to achieve net zero, all while running a $50bn business with over 100,000 employees in 80 countries.
Mars is proof that a large corporation can have a positive social and environmental impact while remaining profitable. However, it requires an ownership structure and a personal commitment from its leaders, management team, and board of directors to do what Danone could not.
If public trust is waning in most liberal economies, then corporate legislation may need to change to support more stakeholder-driven companies and not place them at a disadvantage relative to their shareholder-beholden counterparts. If our legal and regulatory frameworks made it easier to pursue more diverse corporate models, we might see more companies where profits, though necessary, were not an end in themselves but a means to achieve a greater purpose and generate a positive social and environmental impact for all.
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