By: Fran Seegull
Originally Published In ImpactAlpha’s Policy Corner On December 7, 2025.
Read The Article Below Or on ImpactAlpha Here.
The American economic landscape is defined by stark contrasts. Record corporate profits coexist with an accelerating affordability crisis. Technological advancements are boosting productivity but also causing layoffs.
In this challenging environment of deep uncertainty and pervasive volatility, we are witnessing the systematic erosion of corporate accountability.
As we enter 2026, we are approaching a dangerous inflection point in the balance of power between shareholders and management teams and boards that augurs a new era of corporate “management primacy,” to the detriment of the long-term stability, transparency and accountability of our capital markets.
The traditional and, until recently, prevailing doctrine of “shareholder primacy,” championed by Milton Friedman, justly faced profound critiques. A narrow focus on maximizing short-term value solely for investor benefit is often at the demonstrable expense of customers, workers and communities, as well as long-term financial value creation, deepening disparities and straining environmental and social systems.
Just a few years ago, investors, workers and community leaders envisioned a shift toward “stakeholder capitalism,” a framework recognizing that a company’s success is inseparable from the health of the social, economic and environmental systems on which it relies.
The current movement toward corporate management primacy goes decidedly in the other direction. Instead of stakeholder value, we are seeing C suites rapidly consolidating and monopolizing power, with waning accountability to shareholders and other stakeholders.
Backlash and intent
At the start of the 2020s, we saw a new set of economic and business paradigms emerging, rooted in the principles of stakeholder capitalism: climate risk is financial risk; historic disparities undermine inclusive economic growth; and businesses should be more transparent and accountable.
The Business Roundtable’s 2019 statement redefining the purpose of the corporation seemed to confirm that stakeholder capitalism was finally a compelling, mainstream framework that recognizes value across stakeholders.
This awareness surged further in the wake of the COVID-19 pandemic and our country’s racial reckoning after the murder of George Floyd, as systemic disparities across our country were more broadly recognized.
And as devastating floods, storms and fires increased in frequency and severity across the country, we have seen the profound, direct impacts that climate change can have on businesses, communities and households. As we internalized lessons from these crises, the idea that the success of a business relates to the health of our society and the environment started to gain real traction.
The backlash was fierce and immediate. The sound financial practices associated with comprehensive risk mitigation and opportunity maximization—including assessing environmental, social and governance, or ESG, factors—were weaponized, adding fuel to the culture wars. Impact considerations were falsely painted as political rather than prudent long-term risk and return factors.
The chilling effect of political heat, cultural scrutiny and legal threats led many corporations to abandon their commitments to stakeholder-minded practices.
At federal and state levels, long-standing corporate accountability tools and shareholder rights, including corporate engagement, proxy voting and disclosure requests, are all under siege. In a country where corporations already spend billions annually on vast lobbying efforts and powerful trade associations to advocate for deregulation and favorable tax policies, it is alarming to see the market-based system of investor voice come under direct attack.
Governance without guardrails
The rise of management primacy all but ensures structural inequality and facilitates value extraction at an accelerated pace. The priorities of investors and other stakeholders are systematically ignored, suppressed and sidelined. Instead, corporate managers and boards expect and receive extreme deference and control.
Examples of this consolidation of corporate power are numerous and interconnected:
Pay packages: Exorbitant CEO compensation is decoupled from genuine, sustainable performance, often justified by boards that are too close to management to be objective.
Dual-class shares: The proliferation of structures that grant founders and insiders disproportionate voting rights effectively disenfranchises other investor classes that hold the majority of the economic risk.
Shareholder proposal suppression: Corporations are attempting, through changes in both public policy and internal governance, to make it harder for shareholders to file proposals at annual meetings and easier to dismiss those proposals once filed.
Direct retaliation: Most brazenly, we are witnessing the direct punishment of shareholders for exercising their basic rights. Exxon suing its own investors over routine climate-related proposals is the starkest possible example of a management team claiming absolute, unquestionable authority over shareholders.
The age of shareholder primacy may be ending, but dwindling investor power is not being reallocated to stakeholders across the value chain through more cooperative partnership with workers, customers and communities. Quite the opposite.
This is not stakeholder capitalism, and it is no longer shareholder capitalism. This is a new era of management capitalism typified by unchecked corporate power.
Systemic stewardship
Companies allowed to maximize their bottom line, and CEOs their compensation, at the expense of all other factors and with no accountability, will only accelerate the destabilizing forces that threaten our economy, our environment and our communities.
This moment demands bold investor action. Specifically, it demands that investors use all the tools at their disposal to ensure a healthy, efficient and resilient market. That means engaging with portfolio companies, collaborating with investors to set guardrails that protect our social, economic and environmental systems, and getting engaged in critical public policy conversations that will determine the trajectory of our economy.
This set of actions, often referred to as system-level investing, considers the economy-wide risks that will harm diversified portfolios regardless of manager or security selection. Some examples of systemic risks include the climate crisis, income inequality, biodiversity loss and antimicrobial resistance. Each poses massive and urgent challenges that investors cannot afford to ignore, lest their entire portfolios suffer. While not a silver bullet, system-level investing is a commonsense approach that can help propel us toward a more sustainable and equitable economy in which externalities are addressed and all stakeholders are valued.
The choice is not merely between shareholder primacy and management primacy. The choice is between a system built on accountability, transparency and long-term stability, and one that is built on unchecked corporate power and greed at the expense of communities, the environment and indeed the economic system itself. Now is our chance to stem this tide. We must do so before investor freedoms, and indeed free markets, are further eroded.
Fran Seegull is president of the US Impact Investing Alliance.