2021 Lane Reports

Omidyar Takes on Shareholder Capitalism

Wednesday, December 1, 2021 9:00 am
by Marc J. Lane

Omidyar Takes on Shareholder Capitalism

By Marc J. Lane

Although we see promising movement toward stakeholder capitalism, it’s far from universally embraced. Yet there’s no reason business shouldn’t more consistently play an essential role in creating and executing market-based strategies that benefit customers, address societal problems, sustain quality jobs, and support healthy communities.

The Omidyar Network, the self-styled "philanthropic investment firm" established by eBay founder Pierre Omidyar and his wife Pam, is taking a major step to make that happen. The Network is investing at least $10 million over the next three years in organizations committed to developing new models and policies intended to reshape the rules that govern businesses and markets.

The Omidyar Network’s CEO Mike Kubzansky describes the problem and the opportunity this way: “As an organization founded by the creator of eBay, we absolutely believe that business can be a force for good. But too often, markets do not deliver the outcomes we want because the rules that govern them reward decisions that generate financial returns for shareholders without regard to their impact on society.” So Kubzansky’s goal is to encourage investors and corporate decision-makers to contribute to the common good, and to hold companies accountable for their impact on society.

The Omidyar Network’s new focus builds on its decades-old legacy as a leader in the impact investment space, providing both grants and investments to non-profits, advocacy organizations, mission-driven entrepreneurs, and worker coalitions. So it’s no surprise that the initial grant recipients will be a diverse group of thought leaders in the evolving social impact ecosystem including B Lab, Interfaith Center for Corporate Responsibility, Americans for Financial Reform, the Shareholder Commons, United4Respect, and the Value Reporting Foundation.

The Corporations, Capital Markets, and the Common Good initiative seeks to shift both policy and power by recasting the laws of the marketplace that guide corporate and investor decisions. It will target three core areas:

  • Reorienting the rules that govern markets to better balance the interests of all stakeholders in corporate governance – including workers, customers, and communities – and to better measure companies’ positive and negative social and environmental impacts;
  • Curbing pressures from equity capital markets that reinforce short-termism and benefit speculative actors at the expense of stakeholders and society, and reorienting the financial sector to its core purpose of allocating capital to productive use in the real economy; and
    Strengthening the movement of institutional investors that leverage their power to demand stronger accountability and performance from companies on stakeholder, societal, and environmental issues.
  • Chirs, Jurgens, a director of Omidyar Network’s Reimagining Capitalism team, credibly argues that, “Our current model of capitalism is failing,” In his view, “We need to shift toward an economic system in which markets incentivize businesses to contribute to the common good, and simultaneously curb the pressures that drive negative outcomes for people and planet. That’s exactly what we, and our grantees, are focused on doing.”

We wish the Omidyar Network great success as it tackles its most ambitious challenge. May the business and investment communities unflinchingly follow its lead. 

Marc Lane is an attorney and financial adviser to businesses seeking to drive positive social change. He is the author of Social Enterprise: Empowering Mission-Driven Entrepreneurs (American Bar Association), The Mission-Driven Venture: Business Solution to the World’s Most Vexing Social Problems (Wiley), and Representing Corporate Officers and Directors and LLC Managers (Wolters Kluwer), among other works. If you would like to explore how your firm’s positive social impact can be optimized, please reach out to Marc in confidence at 312-372-1040 or mlane@marcjlane.

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The Mission-Driven Venture: Business Solutions to the World's Most Vexing Social Problems

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