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Responsible Capitalism

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Issue 1 | February 2023

Good morning from Brussels!

This is the first edition of ECGI’s new monthly newsletter on responsible capitalism.  This inaugural issue will discuss what responsible capitalism actually is, and what promises it holds. At first glance ‘responsible’ and ‘capitalism’ sounds like a contradiction of sorts. Capitalism is a useful system for wealth creation, but many of the current threats we experience, whether it's rising social inequality or the climate crisis, are inextricably linked to capitalism. The pop-scholarly use of the term ‘late capitalism’ captures some of the absurdities and inequities linked to overconsumption and exploitation. In a cynical way it reflects a sentiment in society that the capitalist system in its current form is not serving us well. The ‘late’ suggests the end of something, but it leaves open what to expect next.

Some may theorize that capitalism should be abandoned altogether, but this is not the path this newsletter will take. Instead I will turn towards ways to reshape certain aspects of capitalism and make it ‘responsible’. Responsible capitalism describes 'an economic system that accommodates private ownership and the pursuit of market opportunities while achieving societal goals’. It re-evaluates the role businesses and markets play for the wellbeing of the world, looking beyond the pursuit of short-term profits and adding a moral or ethical dimension. There is no consensus on how exactly capitalism can be reshaped to become responsible, but an abundance of ideas on the role corporate governance can play.

Under a new initiative, ECGI has separated this agenda into three initial pillars: responsible investmentfamily capitalism and corporate purpose. Responsible investment focuses on the transformation of the global institutional investment sector. It raises questions about the incentives behind and outcome of responsible investment strategies, and how investors can serve as the voice of capital in advocating responsible corporate governance and sustainability in investee companies. Furthermore, it discusses how to foster stewardship and integrate environmental, social and governance (ESG) strategies, while identifying and mitigating greenwashing claims.

Family capitalism directs some much-needed attention to family-controlled companies, and on the governance dynamics of controlled companies generally, as distinct from widely-held companies. While a prominent ownership structure in many countries globally, the role that family-controlled companies can play in transforming the economy is sometimes overlooked. The right incentives could amplify their potential for long-term and value-based leadership.

Corporate purpose has been on the corporate governance agenda for a while, yet the views on the purpose of a business and its role in addressing ESG problems remain divergent. Shedding more light on this question may allow us to identify shortcomings in our conception of a corporation and develop practices to correct them.

Addressing these fundamental challenges paints a promising picture. However, as a heightened focus on ESG issues sweeps through academia and professional practice, it becomes increasingly more difficult to distinguish genuine will for change from false promises and ‘greenwashing’.

The difficulty is no longer to get these topics on the agenda but rather to ensure that they are being addressed in a meaningful and fruitful way. This friction can also be observed at the ‘mecca of capitalism’, the World Economic Forum.

Just a few weeks ago, Davos was once again the showplace for bold statements on climate ambition and the role of business in it. In fact it is nowadays difficult to imagine any such conference not addressing ESG topics. They have long arrived at the heart of capitalism. Yet many criticize a gap between voiced commitments and actions taken.

So how can we clearly distinguish responsible capitalism from irresponsible capitalism— one that causes harm for the people and planet in the pursuit of profit and power? And once we’ve determined exactly what responsible capitalism is, how can we achieve it?

With every issue of this newsletter we will try to get closer to an answer and I invite you to follow along and share your own ideas. Each issue will explore a new topic or question on reshaping capitalism. There will be discussions with top-level academics, policy makers and business leaders as well as reactions to recent ECGI working papers or blogposts. In every newsletter you will also find a curated selection of recent publications, upcoming events and other noteworthy developments.

Cordially yours,


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Marleen Och is a PhD researcher at KU Leuven, Belgium. She works in the field of sustainable finance and corporate governance, writing about shareholder engagement and sustainability.

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