STEWARD OWNERSHIP IN A NUTSHELL

Emergence of the concept of steward ownership has arisen in response to the dominant paradigm of shareholder primacy, which prioritizes short-term earnings over all else. The prevailing dogma since the early 1980’s, it has led to significant social and environmental challenges, leaving many progressive thinkers questioning the role that ownership and finance play in impacting our economy and our society.

Steward ownership philosophy begins with the premise that corporations have a role beyond generating profits. That at their core, companies can and should have a reason for being that is rooted in purpose and that serves a broad range of stakeholders, not just shareholders.

The concept of steward ownership may be new to the US, but it has been around for decades in Europe. The manner in which steward ownership is codified varies across companies, but all share a commitment to long-term mission preservation and independence. This theory can be summarized in two principles: 

Profits Serve Purpose

For steward-owned companies, profits are a means to an end, not an end in and of themselves. Profits generated by the company are either reinvested in the business, used to repay investors, shared with stakeholders, or donated to charity.

Self-governance

For-profit businesses are often beholden to the interests of shareholders who aren’t involved in the operation or management of the business. Steward ownership structures keep control with the people who are actively engaged in or connected to the business. Voting shares can only be held by stewards, i.e., people in or close to the business, and the business itself can never be sold.¹

So, in the simplest terms, a steward-owned company is not a wealth-building engine for an individual or for speculative investors, and it is not a commodity that can be bought and sold. It is permanently independent, and its purpose is safeguarded by “stewards” of the company who shepherd the health and vitality of the business in order to benefit their stakeholders (such as employees, customers, vendors, community members, etc.)

¹ Purpose Foundation (2018) - Steward-Ownership: Rethinking Ownership in the 21st Century