Everyone is talking about entrepreneurship that is suitable for generations to come and offers the economy, society and the planet real prospects for the future. The focus is usually on the content – on what a company actually does. However, it is rarely concerned with the question of how that company is organised and how it is legally structured at its core. Nevertheless, the latter is of crucial importance when it comes to considering and shaping the behaviour of companies. As Kate Raworth (Oxford economist and founder of Doughnut Economics) puts it: ‘More than the design of specific products or services, what matters most is the deep design of the organisation itself.’ This deep design of a company includes, in particular, the issue of ownership – in other words, the question of who owns a company and who ultimately makes the decisions.
One innovative and increasingly well-known answer to the question of ownership is ‘steward-ownership’.
As an alternative to conventional forms of ownership, steward-ownership ensures that companies focus on their purpose in the long term and in a legally binding manner. This is guaranteed by the anchoring of two principles in property law:
- Self-determination: the company remains independent and cannot become a speculative asset, as the majority of the voting rights are always held by people who are directly associated with the company and its mission. They become the trustees or stewards of the company.
- Sense of meaning: profits are a means to an end, not an end in themselves. The value created in the company cannot be taken to an unlimited degree for the personal benefit of the owners. Instead, the company is subject to a legally binding tying up of assets: profits are reinvested, used to cover capital costs or donated.
Steward-ownership is a proven ownership model that has been practised for many decades and has been implemented by companies such as Zeiss (DE), Novo Nordisk (DK), Patagonia (USA), Bosch (DE), Signal (USA), BuurtzorgT (NL), Carlsberg (DK) and many others. Switzerland, too, has a long-standing culture of innovative ownership structures, such as Victorinox (dual foundation), Migros (cooperative), Rolex (individual foundation), CSS (association) and others. Even if they do not always fully embed the above principles, they are still organised very much along the same lines; they are not determined by conventional shareholder value structures and the often purely monetary incentive systems associated with those structures.
The positive effects of steward-ownership have been documented in a large number of international studies. Steward-owned companies are longer-lasting, have proven to be more resilient to crises, tend to be more sustainable and inclusive, are more attractive to many employees, and offer greater social mobility.
As a result, steward-ownership enables young companies not only to pursue their sense of meaning strategically, but also to secure it legally. SMEs will have a new option for succession planning: handing over the company to ‘stewards’, regardless of their family ties or financial situation.
This need and the trend towards meaningful entrepreneurship are particularly evident in the investment world, where the demand for impact financing is growing. This year also saw a shift in the charitable sector: from now on, charitable foundations based in Zurich will be allowed to give money to impact and/or social enterprises, provided that their activities fit the foundation’s purpose. But when exactly is a company an impact or social enterprise?
Often, catalogues of criteria, which are aimed primarily at externally visible factors and thus purely at the superficial level, are intended to answer this question. This makes sense in many respects, but the actual roots of entrepreneurial behaviour remain untouched. This is exactly where steward-ownership comes in – offering donors and authorities a deeper and more clear-cut criterion at a legally binding level: this company acts in a long-term and meaningful manner. It is profit-oriented on the market, pursues commercial objectives and has a clearly defined legal framework regarding what happens to potential profits.
Steward-ownership can bring together the best of both ‘for-profit’ and ‘non-profit’ worlds, as it were, while guaranteeing grant giving foundations that their funds are used for the specific purpose intended. It opens up the prospect of multiplying every Swiss franc invested through the scope of the corporate structure and stimulates healthy and sustainable growth at a structural level.
