Early indications suggest Australia’s ‘Banking Royal Commission’ might be triggering a change in attitude of Australians – not only towards the country’s Banks, but also towards the wider business community. This shift is reminiscent of what occurred in Europe and the UK in the wake of the GFC and reflects a legitimate expectation that businesses should always act in a manner consistent with the long-term best interest of society.
Contrary to conventional thinking, this is not just about businesses honouring their ‘social licence to operate’. Once we have the right understanding, it becomes abundantly clear that no company can meet its true economic obligations to its shareholders unless it sets out deliberately to enhance the wellbeing of all genuine stakeholders – including the wider community.
We use the case study of the thwarted Kraft-Heinz bid for Unilever Plc in early 2017 to illustrate the potential negative consequences for all legitimate or genuine stakeholders (and particularly long-term shareholders) when this principle is not understood.
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