The technology adoption life cycle is a sociological model that describes the adoption or acceptance of a new product or innovation, according to the demographic and psychological characteristics of defined adopter groups. … The most difficult step is making the transition between early adopters and majority.

Jumping the Chasm

For most of my career in socially responsible investment and business, I (and the whole movement) have inhabited first the Innovator and more recently the Early Adopter phases. 

However, in 2019 the movement pretty clearly finally jumped the chasm and entered the Early Majority phase. The indicators of this abound, but here are two big ones:

1)  The Business Roundtable Statement: “an association of chief executive officers of America’s leading companies working to promote a thriving U.S. economy and expanded opportunity for all Americans through sound public policy.” 

On August 19, 2019, 181 CEOs of the largest corporations in America signed and released a statement that expressed the triumph of what can now be called “Stakeholder Capitalism. The statement said, in part: “We commit to:

  • Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
  • Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
  • Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
  • Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
  • Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

2) The BlackRock Statement: BlackRock is the world’s largest asset manager, with $7.4 trillion in assets under management as of end-Q4 2019.

In its 2019 letter to clients, BlackRock announced: “a number of initiatives to place sustainability at the center of our investment approach, including: making sustainability integral to portfolio construction and risk management; exiting investments that present a high sustainability-related risk, such as thermal coal producers; launching new investment products that screen fossil fuels; and strengthening our commitment to sustainability and transparency in our investment stewardship activities.”

“…the investment risks presented by climate change are set to accelerate a significant reallocation of capital, which will in turn have a profound impact on the pricing of risk and assets around the world…”

“Governments and the private sector must work together to pursue a transition that is both fair and just – we cannot leave behind parts of society, or entire countries in developing markets, as we pursue the path to a low-carbon world. While government must lead the way in this transition, companies and investors also have a meaningful role to play. Every government, company, and shareholder must confront climate change…

“We believe that sustainability should be our new standard for investing.”

Winning the Arguments

Beginning in the late 1950s and early 1960s, Milton Friedman and the Chicago School of Economics attacked Keynesian economics. John Maynard Keynes had advanced the need for aggressive government intervention into the economic marketplace to regulate and supplement the “free market” in order to mitigate the adverse effects of recessions and depressions brought on by Capitalist over production and under consumption. Keynesian economics provided the conceptual foundation for the New Deal in the United States.

Friedman championed the idea of a return to the “free market” in which a corporation’s only job was to maximize value for its owners, which amounted to “shareholder capitalism.” Friedman was to the Reagan Revolution of deregulation and removal of the social safety net what Keynes had been to the New Deal, and, for many years, his conceptual framework dominated U.S. economic policy and the activity of U.S. corporations.

Those of us in the early years of the socially responsible investment/business movement waged a long and, initially, lonely struggle against the Friedman philosophy, maintaining that it was the responsibility of corporations to benefit all of their stakeholders and, incidentally, such corporations would also, in the long run, produce better financial returns.

With the statement of principles issued by the Business Roundtable, our side finally won the conceptual argument.

With the statement by BlackRock, our side finally won the argument about which version of capitalism is and will produce the best long-term financial returns for investors.

Turning those conceptual victories into a real transformation of the global economy is now our job.

A Philosophy for Stakeholder Capitalism

The way we have practiced “Free Market” Capitalism over the past 200 years has created great wealth and a high standard of living for many in the U.S. and western world, yet it has left out a large portion of humanity and threatens the planetary eco-system.

The old Free Market Capitalism has produced an extreme and widening gap between the extremely rich and the rest of the population; dependence on dangerous foreign and domestic oil and gas; profoundly serious air, land, and water pollution; and climate disruption. Business and society have come to a fork in the road early in the 21st century. The path we take will play an essential role in determining the future of businesses as well as the future of the U.S. and the world for many generations to come.

It’s time for a new Stakeholder Capitalism. At its core, Stakeholder Capitalism recognizes that business cannot prosper in an unhealthy world. Healthy business, a healthy society, and a healthy environment require each other for long term prosperity.

The Three Forms of Capital: I heard Paul Hawken, author of The Ecology of Commerce and Natural Capitalism, once say that Capitalism could be a great system, but it’s never really been tried. Free Market Capitalism as it has largely been practiced to date has sought to accumulate economic capital at the expense of social and environmental capital.

Now it is true that the discovery of how to accumulate economic capital by offering a product or a service at a price that is greater than the cost of production – thereby generating wealth – is a great and important discovery. Classical Free Market Capitalism has wielded that discovery to generate great wealth, but at a great cost to society and the environment.

However, Stakeholder Capitalism recognizes that there are at least three forms of capital essential to the creation of genuine prosperity. In addition to economic capital (financial and manufactured), there are two other forms – natural and social. Any business-person knows that, over the long run, a successful business needs to invest wisely to generate more income than expenses and to grow its capital. If a business lives off its capital, it will eventually go bankrupt.

Stakeholder Capitalism understands that it is essential to build all three forms of capital in a Sustainable Economy. We could go so far as to say that the goal of Stakeholder Capitalism is to build a Sustainable Economy. A Sustainable Economy can be defined as an economy that uses market forces to build all three forms of capital.

Natural Capital: The economy operates within design limits inherent in the natural environment. If the economy disrupts the natural environment it disrupts itself, at great financial cost to society and to individual businesses. Witness the devastation of the massive weather disruptions and fire storms we are seeing. Under the deceptively named “Free Market” Economy, which bears little resemblance to the type of market envisioned by Adam Smith, enormous resources have been lost that were once, in fact, provided for free by intact ecosystems.

Conversely, a Sustainable Economy recognizes its dependence on the natural environment for fresh air, clean water, climate stability, renewable energy, and a thriving eco-system. In a Sustainable Economy, businesses derive value from the eco-system without disrupting it. As the Sustainable Economy emerges it will utilize true cost pricing and true cost accounting to value major interactions with the natural world.

Social Capital: A prosperous economy depends on a stable society with a skilled and creative workforce. The economy threatens its own foundations if it disrupts society by allowing an extreme gap to emerge between the very wealthy few and the rest of the population or by inadequately supporting society’s ability to ensure public safety, an effective educational system, a well trained workforce, and quality affordable health care.

On the other hand, a truly prosperous economy should contribute to a stable society by creating the jobs, the opportunity for productive work, and the income that people need to live satisfying, creative, meaningful lives. A Sustainable Economy recognizes the profound contribution of social capital to a prosperous economy and builds social capital by reducing the wealth gap, paying its fair share of taxes, and making many other investments in social health and wellbeing.

Economic Capital: Sustained economic prosperity requires that both the private sector and the public sector operate according to sound financial principles, using current income to contribute to the accumulation of long-term economic capital.

Economic capital is most effectively built, and the economy works best when economic transactions are transparent and guided by appropriate policies. Sound regulations provide the guard-rails that keep the economy on track. If those who criticized sub-prime lending and exotic real estate derivatives resulting from excessive de-regulation had been listened to, the economy would have saved trillions of dollars and the Great Recession would not have happened. Massive subsidies to major corporations and industries, hidden inside the tax codes, contribute to the deep distrust of the government, policy makers, and business leaders. The allocation of our economic capital should be fully transparent to have an economy and a society that function well.

In a Sustainable Economy, the government (the public corporation) lives within its means, except during significant economic downturns, and partners with private businesses so that both private and public sectors operate in an economically responsible fashion, while maintaining a sound financial system and reliable physical infrastructure. Investments of public funds for the benefit of current and future generations should be made regularly and wisely.

A New Way of Doing Business

The good news is that the movement to transform Capitalism and create a Sustainable Economy has been growing and evolving for many years and appears to have now reached a tipping point. This movement has taken a variety of forms over the last 30 years.

Corporate Social Responsibility (CSR): By now, entering the third decade of the 21st Century, Corporate Social Responsibility (CSR), which is also sometimes referred to as “Corporate Citizenship” or Corporate Sustainability, has become a majority movement among publicly traded corporations.

According to the CSR philosophy, corporations should operate in a manner that minimizes negative impacts and encourages positive impacts on all of the corporations’ stakeholders–customers, employees, management, shareholders, supply chain, communities where the corporations are located, society at large, and the environment. CSR also typically involves regular reporting on the corporation’s impacts on all of its stakeholders. Most CSR and Sustainability Reports are listed by CSRWire.

In The Time Has Come, KPMG’s Survey of Sustainability Reporting 2020“ KPMG professionals reviewed sustainability reporting from 5,200 companies in 52 countries and jurisdictions as well as the world’s largest 250 companies. According to the Survey, 80% of companies worldwide report on sustainability and 96% of the world largest companies do. A significant majority of companies worldwide (68%) and among the largest companies (72%) tie their reporting to the U.N.’s 17 Sustainable Development Goals (SDGs). (See Part IV Section 4 below for a discussion of the Sustainable Development Goals.)

Shared Value: Shared value is a management strategy in which companies find business opportunities in social problems. While philanthropy and CSR focus efforts focus on “giving back” or minimizing the harm business has on society, shared value focuses company leaders on maximizing the competitive value of solving social problems in new customers and markets, cost savings, talent retention, and more.

According to the founders of the concept of Shared Value, Michael Porter and Mark Kramer, “Shared value is not social responsibility, philanthropy, or sustainability, but a new way for companies to achieve economic success.”

There are three levels of Shared Value:

  1. Reconceiving Products and Markets: Meeting societal needs through products and addressing unserved or underserved customers
  2. Redefining Productivity in the Value Chain: Changing practices in the value chain to drive productivity through better utilizing resources, employees, and business partners
  3. Enabling Local Cluster Development: Improving the available skills, supplier base, and supporting institutions in the communities where a company operates to boost productivity, innovation, and growth

Fortune now publishes an annual Change the World List. The 2021 list includes 53 major companies pursuing Shared Value

GE’s Ecomagination program, which has shifted the company’s focus toward Cleantech products and produced some of the highest levels of profitability in the corporation, is an example of the first way.

Regardless of what one thinks about other aspects of their operation, Walmart’s establishment of sustainability standards for all of its suppliers, which has forced thousands of businesses across the globe to rethink the design and manufacturing of their products in a more environmentally responsible fashion, is an example of the second way.

IBM’s Smarter Cities Challenge exemplifies the third way. IBM has funded putting IBM teams into cities to recommend how cities can utilize the intersection of the full range of information technologies and clean technologies to produce positive transformations.

CSR can be seen as a way to ‘do no harm,’ thereby not depleting environmental, social, and economic capital, while Shared Value can be viewed as a way to ‘create positive good’ by directly building environmental, social, and economic capital.

Benefit Corporations: Benefit Corporations (B Corps) have taken a step beyond CSR and CSV. In 38 states and the District of Columbia in the U.S., it is now possible for a company to incorporate with the new legal status of a “Benefit Corporation” by including a commitment to all of the company’s stakeholders in the company’s corporate charter.

B Lab is an independent not-for-profit that does independent certification of B Corps. According to B Labs, at the beginning of 2021, there are now approximately 3,762 certified B Corps in 74 industries in 150 countries. It’s been said that B Corp certification is to corporate governance what LEED certification is to green buildings/developments, what Fair Trade certification is to coffee and other imported products, and what US Department of Agriculture certification is to organic foods.

The California version of B Corp legislation includes provisions obligating companies incorporating as B Corps to publish annual reports assessing their social impact according to established economic, social, and environmental standards. Essentially, B Corps commit to operating in a way that builds economic, social, and environmental capital as well as producing financial profits.

Some of the best-known B Corps include: Patagonia Works; Danone North America; Ben & Jerry’s; Stonyfield Organic; 7th Generation; and Amalgamated Bank.

Socially Responsible Investment: As I discussed in relation to Progressive Asset Management, above, Socially Responsible Investment (SRI) initially developed in the first half of the 20th Century when churches decided to eliminate “sin” stocks (e.g. tobacco and gambling) from their investment portfolios. The SRI Movement grew dramatically when the Anti-Apartheid Movement embraced divestment from companies doing business in South Africa as a strategy to oppose Apartheid.

After the victory of the anti-Apartheid forces, the SRI Movement evolved to apply a set of negative screens to eliminate the stocks of companies that didn’t meet investors’ social and environmental criteria and positive screens to embrace the stocks of companies that met investors criteria. This version of SRI investments applied ethical criteria to investments, semi-independent of the impact of those criteria on financial return.

In 2005, the U.N. Global Compact proposed the use of “environmental, social, and governance” (ESG) criteria in the evaluation of investment portfolios, because they linked values with the financial performance of stocks and corporations. ESG investments pursue a market rate of financial return by incorporating ESG factors into investment analysis.

In 2007, the Rockefeller Foundation coined the term “Impact Investments” to highlight investments that have a positive impact on society and the environment. Impact Investments can either pursue market rate or (often) below market rates of financial return.

Sustainable and Responsible Investment: The Forum for Sustainable and Responsible Investment (US SIF) ( is the US membership association for professionals, firms, institutions, and organizations engaged in Sustainable and Responsible Investing. (This is what used to be called Socially Responsible Investing. The movement has kept the SRI initials but changed what they stand for to bring the environmental perspective into higher relief.)

Biannually, US SIF issues a report on Trends in Sustainable and Responsible Investing in the United States. The Trends report counts two main strategies as sustainable investing: applying various environmental, social and governance (ESG) criteria in investment analysis and portfolio selection – and filing shareholder resolutions on ESG issues. According to the 2020Trends report:

  • The total US-domiciled assets under management using sustainable investing strategies grew from $12.0 trillion at the start of 2018 to $17.1 trillion at the start of 2020, an increase of 42 percent.
  • This is 33 percent – or 1 in 3 dollars – of the total US assets under professional management.
  • The top three specific issues for money managers and their institutional investor clients are climate change/carbon emissions, sustainable natural resources/agriculture, and board issues.
  • From 2018 through the first half of 2020, 149 institutional investors and 56 investment managers controlling $1.98 trillion in assets under management led or co-led shareholder resolutions on ESG issues.

Community investing institutions direct capital to communities and individuals underserved by conventional financial services. They typically provide capital for small businesses, affordable housing units, charter schools, grocery stores and other community amenities.

Community investing institutions include banks, credit unions, loan funds and venture capital funds that are certified and overseen as community development financial institutions (CDFIs) as well as credit unions and loan funds not certified as CDFIs but with the mission of serving lower income communities.

According to the 2020 Trends report: community investing assets increased by just over 50 percent between 2016 and 2018, and most recently grew by 44 percent between 2018 and 2020 to $266 billion. The number of community investing institutions stood at 1,204 in 2020, up from 1,145 in 2018.

Impact Investment: Impact Investing is the most recent incarnation of SRI. According to the definition used by the Global Impact Investing Network (GIIN) ( “Impact investments are investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social and environmental impact alongside a financial return.” As of 2020, GIIN estimates the current size of the global impact investing market to be $502 billion.

“Impact investments can be made in both emerging and developed markets, and they target a range of returns from below-market to above-market rates, depending upon the circumstances.”

“A hallmark of impact investing is the commitment of the investor to measure and report the social and environmental performance and progress of underlying investments. Components of impact measurement best practices for impact investing include:

  • Establishing and stating social and environmental objectives to relevant stakeholders.
  • Setting performance metrics/targets related to these objectives using standardized metrics wherever possible.
  • Monitoring and managing the performance of investees against these targets.
  • Reporting on social and environmental performance to relevant stakeholders.”

GIIN has developed the Impact Reporting and Investment Standards (IRIS) ( as a catalog of “generally-accepted performance metrics that leading impact investors use to measure social, environmental, and financial success, evaluate deals, and grow the credibility of the impact investing industry.” GIIN has also established ImpactBase ( as a searchable, online database of impact investment funds and products designed for institutional and accredited individual investors.

Fossil Fuel Divestment: As a society, we need to recognize that it is time just to stop doing some kinds of business, in particular leaving fossil fuel in the ground. A substantial number of investors clearly agree with this proposition, because they have joined the movement for fossil fuel divestment, with most reinvesting in clean renewable energy.

In January 2020 in his annual letters to CEOs and to shareholders, Larry Fink, CEO of the world’s largest investment management firm affirmed that Black Rock was: “Making sustainability integral to portfolio construction and risk management; exiting investments that present a high sustainability-related risk, such as thermal coal producers; launching new investment products that screen fossil fuels; and strengthening our commitment to sustainability and transparency in our investment stewardship activities.”

By April 2020, a total of 1,192 institutions and over 58,000 individuals representing $14 trillion in assets worldwide had begun or committed to a divestment from fossil fuels. (Wikipedia)

Fossil fuel divestment resources include:

Toward a Sustainable Economy

Taken together, Corporate Social Responsibility, Creating Shared Value, B Corps, Sustainable and Responsible Investment, Impact Investment, and Fossil Fuel Divestment amount to a new way of doing business that now is beginning to go under the rubric of Stakeholder Capitalism and this movement is definitely growing rapidly.

We all can help to build Stakeholder Capitalism and a Sustainable Economy through the purchases we make, the companies we work for, the companies we invest in, and the economic policies we support politically. Our actions are contributing to a tipping point where Stakeholder Capitalism in a Sustainable Economy that builds all three forms of capital will clearly demonstrate its profound economic superiority over the false Capitalism that continues only to create economic capital at the expense of natural and social capital.

We can all contribute to this transformation and we can all profit from it. Our future depends on it.