What does stakeholder capitalism emphasize?

Study for the CFA Sustainable Investing Certificate. Use flashcards and multiple-choice questions; each question provides hints and explanations. Prepare effectively for your exam!

Stakeholder capitalism emphasizes the idea that businesses should account for and serve the interests of all their stakeholders, not just shareholders. This includes a broad range of parties such as employees, customers, suppliers, the community, and the environment. The concept moves beyond traditional profit maximization, arguing that long-term business success is linked to how well a company addresses societal needs and environmental concerns.

By recognizing and balancing these diverse interests, stakeholder capitalism aims to create value that benefits society as a whole, rather than only concentrating on financial returns for shareholders. This approach is increasingly seen as essential for sustainable business practices, reflecting a growing acknowledgment of the interconnectedness of economic, social, and environmental factors in driving overall prosperity.

In contrast, the other options focus narrowly on either financial performance, environmental issues, or traditional metrics, which do not align with the holistic approach of stakeholder capitalism.

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