What makes a company successful? For decades, the answer was largely measured through financial performance and the returns delivered to shareholders. Yet business success does not exist in isolation. Behind every company's performance lies a network of relationships with employees, customers, suppliers, communities, regulators, and investors, whose interests and expectations can directly influence its ability to operate, grow, and remain resilient. As businesses navigate increasingly complex economic, social, and regulatory environments, corporate governance is evolving beyond its traditional emphasis on shareholder returns. The question is no longer simply how companies create value for shareholders, but how they can sustain that value by recognising and managing their responsibilities to a broader range of stakeholders.
Governance carries more weight than procedures that guide boards in overseeing management–it encodes what a company believes in doing its business, which shapes day-to-day decisions. Roughly from 1980s onward, shareholder primacy governance became the dominant model of which was driven by a wave of company takeovers and equity-based executive pay, pushing companies to narrowly focus on generating maximum returns on share price. In recent years, however, governance practice has broadened: it now holds that management should also account for the interest of the groups a firm substantially affects, or is affected by–employees, customers, communities, suppliers, and regulators, alongside shareholders. This is generally known as “enlightened stakeholder value” governance.
Beyond its ethical importance, overlooking stakeholder interests may face firms commercially. Mismanaging stakeholder relationships show up in financial loss, reputational damage, regulatory exposure, and operational disruption–lost retail partners, canceled contracts, or a stalled supply chain while a company scrambles to respond. Seen this way, embedding stakeholders interests as a mainstream element of corporate strategy functions partly as risk management, reducing likelihood of losses while reflecting company’s commitment to act sustainably.
Adopting this governance model, however, requires companies to adjust their budget, factoring in aspects such as human capital, finance, economic, and social value. Supplier audits, living-wage commitments, and compliance monitoring are real line items, and boards understandably want to know whether they are worth the spend. The clearer case is what happens without those spendings (Boohoo Case): in 2020, UK fashion retailer Boohoo was found to be sourcing from a Leicester supplier paying workers roughly £3.50 an hour, well below minimum wage. Within days, major retail partners including Next, Asos, and Amazon dropped Boohoo’s brands, causing its share price to plummet. The company, then, was forced to earmark £10 million for emergency supplier auditing and compliance processes, on top of reputational repair. A modest, planned budget for maintaining a firm's commitment to their stakeholders thus functions as a preventive way of a larger, unplanned one when crisis occurs.
Internally, culture built around inclusion, workplace safety, fair wages, and substantive health benefits functions as a retention and productivity tool. Costco, for example, offers higher wages and affordable benefits which are aimed at improving its employees productivity and loyalty (Costco To Raise Minimum Wage To $16 An Hour: 'This Isn't Altruism'). Favoring employees’ interests, however, means more than paying them well. Deloitte’s 2025 Gen Z and Millennial Survey found that younger workers are seeking a “trifecta” of money, meaning, and well-being, and that these three are closely interconnected. Building a supportive, inclusive workplace that delivers all three takes time. It takes capacity building, development opportunities, and positive coworker relationships, and companies may need to adjust their budgets along the way. Staying attentive to this dimension may also attract prospective investors as nowadays investors do not only look for the company’s growth potential, but also tangible evidence of how the company treats its human capital, including fair wages, substantive health benefits, diverse leadership and employee turn-over rates.
Beyond internal practices, stakeholder commitments increasingly need external validation. As more companies describe themselves as "responsible", a market has emerged for third-party designations that lend credibility to the claim. B Corp certification and licensing, administered by the nonprofit B Lab has been widely adopted, with over 10,000 certified companies worldwide (B Lab Data). Certification requires a company to, among others, complete the B Impact Self-Assessment, undergo a certification audit by B Lab, from which the company shall address nonconformities, and adopt stakeholder governance principles in its governing documents to formally binder d directors to consider stakeholder interests. Certification is valid for 5 years, but a reassessment by B Lab to ensure compliance is required every three years (B Lab UK certification process).
Patagonia, the outdoor apparel maker, shows what this looks like in practice. Certified since 2011, its B Impact score has consistently run in the 150-166 range since 2016–with the B Corp Certification qualifying bar being 80 (Patagonia B Impact Score). That score reflects concrete choices, including a 2022 ownership restructuring that routes profits to a climate-focused trust and nonprofit (Patagonia Works), and a 2020 commitment to eliminate Chinese-sourced cotton from its supply chain over forced-labor concerns in Xinjiang (Fortune).
The opposite case shows why independent verification matters. While companies may develop their own metrics, relying on them alone can be costly. The consequences of failing to do so are not hypothetical. An SEC investigation found DWS Investment Management Americas Inc. (“DWS”), the asset-management arm of Deutsche Bank, had made materially misleading statements about how thoroughly ESG factors were actually incorporated into its investment process. DWS relied on its own internal tool, the DWS ESG Engine, but the SEC found that it lacked adequate procedures to ensure the accuracy of its public statements about ESG-integrated products. In consequence of such findings, DWS agreed to a $19 million penalty in September 2023 (SEC press release).
Stakeholder commitments can be integrated through well-designed Key Performance Indicators (KPIs). Credible programs begin with stakeholder mapping, which identifies the groups a firm most materially affects, and then build KPIs to match. Each KPIs should be tailored to what the business actually does and verifiable by a party outside the company. That external check is what makes a claim legitimate rather than promotional, and verification against a recognised standard is a core part of what makes a claim commercially credible.
Stakeholder-inclusive governance works best as an operational discipline: budget for it deliberately, map material stakeholder risk by industry, build verifiable KPIs, and submit them to review the company does not control alone. Firms that do this may be better placed on the talent, growth, and trust measures that increasingly shape commercial outcomes, and may reduce their exposure to fines and other consequences that could harm them.
Raisha Diamar (Senior Strategy Associate) and Syifa Nabila (Researcher)