The benefit stance: responsible ownership in the twenty-first century

• Published in: Oxford review of economic policy 2020-07, Vol.36 (2), p.341-361
• Main Author: Alexander, Frederick H
• Format: Article
• Language: English
• ISSN: 0266-903X; 1460-2121
• DOI: 10.1093/oxrep/graa002

Ownership in the global equities markets is dominated by large institutions that manage the savings of beneficiaries with long investment horizons. These asset managers rely on incomplete investment models that betray the interests of their beneficiaries and threaten their collective future. The models encourage individual companies to compete without regard for health of the critical social and environmental systems that support the long-term value of those beneficiaries’ diversified portfolios and lived experience. These naïve models ignore the growing cost of profit-driven negative externalities. This article examines the latest models of benefit corporation law, a new form of governance that overturns the rule of shareholder primacy, and argues that their principles should be expanded to cover the entire chain of investing, from savers to funds to asset managers and finally to the real economy.