Measuring Stakeholder Capitalism: Everything You Need to KnowJan 17, 2023
By Meghan French Dunbar
One of the most common questions we're asked is how to measure the success of a stakeholder business. Measuring the impact that your company has on respective stakeholders isn’t as black and white as a good old P&L statement, but it definitely can be done. Fortunately, a handful of tools have already been developed for measuring stakeholder capitalism and the impact your business has on all its stakeholders. Here's an overview of the key measurement tools in the space, as well as a brief synopsis of the strengths and weaknesses of each.
Stakeholder Capitalism Measurement Tools
The B Impact Assessment
Created by B Lab (the nonprofit organization behind B Corp Certification), the B Impact Assessment is a comprehensive tool for measuring stakeholder capitalism, helping organizations assess their impact on team members, the environment, their community, corporate governance, customers, and more. It’s a free tool that any business can use, and those who complete the impact assessment are able to compare their scores with other business leaders worldwide who have also completed the assessment.
Common Question: What is the difference between the B Impact Assessment, B Corp Certification, and Benefit Corporations?
- The B Impact Assessment is a free, publicly available tool for measuring stakeholder capitalism. Any company that wants to examine their impact on company stakeholders can access the assessment.
- B Corp Certification is a certification process for companies that receive a score of 80 or above on the B Impact Assessment. Pursuing certification means completing the B Impact Assessment, paying an annual due, having your assessment reviewed by a B Lab team member, and re-certifying your organization every five years. Upon official certification, companies are allowed to use the official B Corp logo on their products (similar to organic or fair-trade certification).
- Often confused with certified B Corps, Benefit Corporations are a legal designation, like an S Corp or C Corp. Benefit Corporations are designed to allow a company to officially and legally place a higher purpose at the core of its operations, guard against investor pressure and legal challenge, and prioritize their purpose above short-term shareholder returns. More than 40 U.S. States have proposed or passed legislation acknowledging Benefit Corporations as a legal status.
The B Impact Assessment (as well as the certification process) is meaningful and likely challenging for most companies. The tool will help you understand key areas for improvement, and the B Corp designation is widely recognized and increasingly global. The assessment provides a great objective analysis of your current impact initiatives.
The assessment and certification only emphasize objective, verifiable factors and miss important but subjective aspects of a company such as the quality and ambition of its higher purpose and the health of the workplace culture. The tool is a self-assessment, meaning you fill out your own assessment but don’t engage with any of your stakeholders to verify your answers.
Stakeholder Capitalism Metrics
In September 2020, the World Economic Forum (WEF) published Stakeholder Capitalism Metrics after a six-month-long process of collaborating with 200 companies worldwide. The metrics review impact in the areas of people, planet, prosperity, and principles of governance.
The metrics are comprehensive; the WEF is highly reputable; and the process for creating the metrics was done in collaboration with 200 global companies. Sidenote: the Founder and Chairperson of WEF, Klaus Schwab, pioneered many of the ideas behind stakeholder capitalism, as he was one of the first people to discuss the theory in the 1970s. The tool is helpful for companies measuring stakeholder capitalism to get an objective, baseline read on areas the company should focus on as a stakeholder business.
As with the B Lab Assessment, the metrics used are based on quantifiable data and miss the topic of higher purpose altogether. The tool is also a self-assessment, which doesn’t encourage engagement with or verification by company stakeholders. Many of the metrics focus on ensuring the company is not actively causing harm or is checking a box, rather than prioritizing evaluation of how the company truly benefits its respective stakeholders.
The Stakeholder Score
The Stakeholder Score, which is an open-source impact measurement tool for all businesses, was created through a collaboration between numerous stakeholder-capitalism thought-leaders and practitioners. The Stakeholder Score assesses six areas of focus, including collaborative relationships, helping people thrive, dismantling discrimination, inclusion and equity, financial prosperity, environmental prosperity, and higher purpose.
The measurement tool was created by a group of practitioners who have been practicing stakeholder capitalism for years; it prioritizes ensuring the company is benefiting stakeholders, not just reducing harm to stakeholders. There is both a self-assessment component and a stakeholder survey to help companies engage with stakeholders and verify their answers. The Stakeholder Score provides organizations with a useful tool for capturing key stakeholders’ perceptions of the businesses impact.
The tool is lesser known and the process of surveying company stakeholders can feel both daunting and time-consuming. The end result of the Stakeholder Score process yields a subjective overview of how the company’s stakeholders perceive the company, but it lacks objective, quantifiable measurements of key impact indicators.
Sidenote: Stakeholder Business co-founder, Nathan Havey, was involved as a convening force and thought-leader on the creation of the Stakeholder Score, so we don’t claim complete objectivity as an organization. That said, we did our best to provide a comprehensive overview of these measurement tools with as little bias as possible.
All three of these tools for measuring stakeholder capitalism provide businesses with key insights to help gauge the value your company is bringing to its stakeholders. That said, the most comprehensive analysis of your company’s impact would likely result from both objective and subjective measures, which no current measurement tool fully encapsulates. For leaders who are desiring this more comprehensive perspective, we typically recommend doing one of the two more objective analyses (B Impact Assessment or Stakeholder Capitalism Metrics) coupled with the more subjective Stakeholder Score.
Regardless of the approach you take, taking the step of measuring your company’s impact will yield new insights and help with your understanding of key company performance that you didn’t have before. Happy measuring!