With such a big focus on corporate social responsibility, many companies operate under the stakeholder style of management, but have pension schemes been forgotten?

An old argument amongst business academics is the shareholder versus stakeholder theory. Economist Milton Friedman argued that a company’s only social responsibility is to maximise profits for its shareholders, whereas stakeholder theory asserts that a company must give due regard to all interested parties, even if it reduces company profitability. In the modern world, the stakeholder theory is a popular choice, but there is a line of thought that paying due regard to all stakeholders can help increase profits. Companies want to be seen as climate friendly, charitable, good employers and customer centric; it is de rigeur.

Take for example Starbucks, which will close thousands of US stores on the afternoon of 29 May to carry out training “geared towards preventing discrimination” following several incidents. Doing so will affect its profits for the afternoon the stores are closed, but in the long term, will showing that management cares about the way employees treat customers have a positive impact on profits?

For companies with pension schemes, their members are of course stakeholders. But, do they hold the same value as the company’s shareholders, customers, suppliers or government? Of course, they dual up as employees, or former employees, but being a member of its pension scheme is separate to that.

High-profile cases from the past few years, such as BHS, Toys R Us, Bernard Matthews, Hoover, Tata Steel and Carillion would suggest not. The pension schemes were the forgotten stakeholders, seen as a drain on profits, hidden away, until the companies were forced to reveal their actions. The examples listed above may be the catalyst pensions need, however, as it seems there’s been a change in the way this unassuming stakeholder is seen. Not by the companies themselves, but by its fellow stakeholders. The takeover of GKN by Melrose, for example, saw huge pressure from the government, the pension trustees, unions and the media. It led to Melrose committing to a package of £1bn for the pension scheme.

Last month, First Group revealed the American firm Apollo Management had made a bid for it, which it instantly rejected. Nonetheless, media attention focused in on the transport company’s pension scheme. Last year it was identified as the company most under pressure from its pension scheme relative to its size because of its £4bn pension liabilities against its £1.2bn market capitalisation.

Carpetright, which has proposed a Company Voluntary Arrangement (CVA), led to British Property Federation assistant director of real estate policy, Stephanie Pollitt, advising that landlords and shareholders voting “need to take into consideration the impact on their investors, including those protecting pensioners’ savings”. This, an example of a stakeholder acting in the interests of opposing stakeholders – the landlords – speaking out for pension scheme members. It may be optimistic, but it looks like this once-forgotten stakeholder is on the rise.

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