Corporate Sustainability: Shareholder Primacy Versus Stakeholder Primacy

Business organizations have recently been encouraged by investors, regulators, and communities to define their purposes, values, and fiduciary duties of creating shared value for all stakeholders.

Public companies have traditionally operated under the corporate model of “shareholder primacy” with the primary purpose of generating returns for shareholders and thus corporate activities are managed toward creating shareholder value. The stakeholder primacy system encourages directors and execut...