STAKEHOLDER CAPITALISM-NEW NORMAL

"Stakeholder Capitalism" is making headlines in economic and corporate world and the World Economic Forum has envisioned it to be the future of trade and investment. The concept which has transformed the purpose and goal of business and ensures that business serves society at large, gained momentum after Larry' Fink's (CEO Black Rock Investment) letter in 2018 to CEOs to make a positive contribution to society.

- Ajay Chandra Pandey

This concept propagates that usefulness of a business/ company should be measured in terms of well-being of all stakeholders. There is a growing social movement to rethink capitalism. The investors too are throwing their weight around the theory of stakeholder capitalism to drive long term value creation and sustainable growth by integrating ESG factors and regulations into their business strategies and assessment models to better manage & assess risks beyond "conventional" business & financial performance so that better capital allocation can be done.

ESG stands for Environmental, Social & Governance practices being followed by an organisation. These three aspects are mandatorily considered when investment decisions are made under ESG investment concept. It is being increasingly realised that investment decisions based on ESG factors, in addition to financials, is advantageous for investors in the long term towards achieving sustain ability and value creation.

Further "Environmental, Social and Governance (ESG)" factors are attracting serious attention of all stakeholders i.e. governments, regulators, investors, lenders and corporates and this will transform not only investment and its management landscape, but it has potential to bring about attitudinal change in corporates towards business goals and objectives. This also ensures adoption of comprehensive risk management practices on the part of the corporates.