The rise of non-financial priorities in corporate governance and the focus on corporate purpose has attracted a lot of attention in recent years. Some have dismissed the increasing corporate emphasis on “stakeholder” interests & ESG issues as “woke capitalism,” which one pundit recently defined as the belief that “businesses ought to obey orders from the progressive elite, regardless of how thin its connection to any company may be.”
I’ll be the first to admit that some of this stuff is downright silly, but I don’t think this phenomenon can be tossed aside with a talk radio sound bite like “woke capitalism.” It seems to me that there’s something deeper going on, and that the recent Super League fiasco provides some insight into what that might be.
In case you’ve been living under a rock, last week, some of Europe’s wealthiest & most successful soccer teams decided to strike out on their own with an exclusive, multi-national “Super League.” While it was announced with great fanfare, the Super League imploded almost immediately. Fans, players, coaches, and even governments all expressed outrage over the attempted greed grab. The reaction appears to have caught the league’s organizers & financial backers by surprise. It shouldn’t have, and this excerpt from a recent Axios newsletter explains why:
A small group of 12 ultra-elite soccer clubs had access to the finest strategy, polling and public relations advice that money can buy. The deal they unveiled on Sunday night was years in the making. But they and their advisers missed something big — that society as a whole is now willing to forego wealth if it means more equality.
– Brexit made almost everybody in Britain worse off, for instance — but it also hit the rich London cosmopolitans and bankers the hardest.
– The Fed is openly embracing the prospect of higher inflation — something that erodes wealth and hits rich savers, while inflating away the debts of the poor.
The article sums up the current zeitgeist by stating that “when the source of a company’s profits is manifestly unfair, those profits are more likely than at any time in decades to be facing existential threats.” If you buy that conclusion, then business leaders aren’t falling in line with progressive elites – they’re just “reading the room.” Many appear to have decided that society’s decades-long embrace of “winner take all” capitalism is coming to an end, and that their companies need to think & act differently in order to continue to prosper in a more egalitarian environment.
Of course, so far this new attitude among business leaders hasn’t extended to their own compensation, but perhaps we can hope for a “Super League moment” there in the not too distant future as well.
-John Jenkins, TheCorporateCounsel.net April 27, 2021
