Accountable: The Rise of Citizen Capitalism

by Michael O'Leary, Warren Valdmanis

This provocative book takes us inside the fight to save capitalism from itself.

Corporations are broken, reflecting no purpose deeper than profit. But the tools we are relying on to fix them—corporate social responsibility, divestment, impact investing, and government control—risk making our problems worse.

With lively storytelling and careful analysis, O’Leary and Valdmanis cut through the tired dogma of current economic thinking to reveal a hopeful truth: If we can make our corporations accountable to a deeper purpose, we can make capitalism both prosperous and good.

What happens when the sustainability-driven CEO of Unilever takes on the efficiency-obsessed Warren Buffett? Does Kellogg’s—a company founded to serve a healthy breakfast—have a sacred duty to sell sugary cereal if that’s what maximizes profit? For decades, government has tried to curb CEO pay but failed. Why? Can Harvard students force the university to divest from oil and gas? Does it even matter if they do?

O’Leary and Valdmanis, two iconoclastic investors, take us on a fast-paced insider’s journey that will change the way we look at corporations. Likely to spark controversy among cynics and dreamers alike, this book is essential reading for anyone with a stake in reforming capitalism—which means all of us.

Genres: Economics, Business, Nonfiction

368 pages, Hardcover

First published August 18, 2020

About the author

Various authors
For the New Zealand poet & author, see https://www.goodreads.com/author/show...

Reviews

[Haley · Rating 5 out of 5]

Absolutely worth reading! Approachable, engaging, and optimistic argument on how to save capitalism from itself.

Main argument: Corporate social responsibility, government control, divestment and impact side projects are bandaids for what is really a problem of purpose. Since stagflation in the 1970s, corporations have become solely focused on driving profit for shareholders, leading to negative externalities not priced into the system. To fix this…we should hold corporations accountable to a deeper purpose than profit, which will drive behavior that creates value for all stakeholders (not just shareholders) in the long run. Though it may seem that the trade-off is between profit and impact, it’s really a trade-off between a certain measurable expense today and an uncertain, immeasurable return in the future (i.e., the potential for higher growth and less risk in the future due to better practices).

What I liked the most: that every company has an impact…it’s just a matter of degree and direction. Every company should have a clear purpose and compelling vision for why it exists in the world to guide strategy. Impact should be core to a company’s economic engine - not a side project.

Issues with the book: it’s a string of vignettes as opposed to a more comprehensive data-driven argument. This makes it super readable, but does leave many holes in the argument for those starting the book not already convinced. Also, left us hanging a bit on the “HOW”. For example, institutional investors (mutual funds, endowments, pensions) account for 93% ownership of the S&P 500. Should I want Vanguard to increase its fee ratio so it can be more engaged as my proxy or should I personally weigh in on every important shareholder vote in each company I own a tiny fraction of through a mutual fund?

[David Kemper · Rating 5 out of 5]

A strong nuanced look at where we can create long term aligned capital. The vignettes are highly readable and worthwhile in their own right. The overall argument, that we are missing shareholders voting with values rather than just investing or voicing with their values can be a valuable one as so many take on the hard work of reforming our current system.

I hope Accountable is widely read, and even more so that it is widely acted upon.

[Zoe Weinberg · Rating 5 out of 5]

Dangerous to the status quo!

[José Miguel · Rating 5 out of 5]

This is a really great book that discusses in a well structured manner the behind the scenes stories of major movements rising from different segments of our modern capitalist society to save it, from itself.

The authors, two veteran impact investors (one of them is the Managing Director of Engine No1, the hedge fund that recently drove the shareholder proposal to enact Exxon Mobile's changes at its Board of Directors) walk the readers through very solid arguments and great analogies about why the modern way we govern and manage our corporations is subject to little or none accountability, all in the premise of protecting shareholder's interests without thinking thoroughly who the shareholders are. Even the idea of accountability gets lost, as everyone is very distanced from each other, shareholders from corporations, corporations from shareholders, consumers from corporations and so on, so the decisions most of the managers and investors are taught to act based on end up being completely unfit for purpose.

Since the 1970's the shareholder primacy, and fiduciary absolutism, have been almost universally accepted as truths in the business world, and their prioritization by modern Boards and executive teams have created an economy driven by short-termism with little or no accountability to stakeholders. This was not always like this, and the authors present plenty of evidence, including the teachings of Adam Smith, how companies were chartered in the past, and the purposes from where founders found companies that end up growing in large MNCs among others. The authors also discuss how shareholders also wear other hats such as citizens, employees and consumers and for most of the time these stakeholder hats are more important, of interest and of relevance than the shareholder's hat.

As someone working in corporate sustainability & ESG I must say this book is a terrific read, full of great case studies and stories from the leaders, including CEOs, academics and others who are pioneering new approaches to drive long-term stakeholder value and to transform capitalism into a more sustainable, responsible and long-term oriented socio-economic system.

A very powerful book for professionals in the sustainability investing space to focus efforts in driving positive outcomes, and for any citizen interested to exercise her/his shareholder rights to implement transformational changes at modern corporations. Engagement is a very important tool to drive change in the 21st century.

[Bruce Crown · Rating 1 out of 5]

0.26

There is no ethical consumption under capitalism, no matter the fancy branding of former CEO or bank executives. Only government regulation will hold greed accountable, and because companies donate for the privilege to exploit us and write the laws that shackle us, hogwash like this will continue to be published as if change is around the corner. All this book does is pretend that the status-quo, of consumption and of the inherent social value and capital resulting from that consumption, is changing. It is not.

O'Leary ran one of the most exploitative businesses ever to have the displeasure of existing: Ryanair. None of his opinions have any merit. He is exploitative, manipulative, and greedy. And to top it off, he is incredibly racist.

• https://www.theguardian.com/business/...

• https://www.france24.com/en/20180926-...

• https://news.sky.com/story/ryanair-bo...

[Alice Qi · Rating 4 out of 5]

“Fiduciary absolutism has created a world in which it seems normal for companies that are meant to nourish us to make us sick. This irony isn’t limited to food. Think of all the pain that painkillers have caused this country. Or the financial tree of retirees caused by unscrupulous financial advisors. These are not morally ambiguous products—casinos, cigarettes, or porn. These are industries with a very clear underlying purpose. Yet because of fiduciary absolutism, they put profit above all else, often subverting whatever purpose they could have served.”

4 years of business school teaches you that profit maximization is the ultimate goal of businesses, and that raising the share price is smart and responsible executive level management. It’s no wonder then that by the end of the 4 years, I know more students jaded by business and its role in society than those who have very positive reviews of their academic education in a business program. I thought this book had a lot of interesting ideas about how we can improve the way corporations are run, and it made me feel hopeful entering a similar profession as the authors. Mainly this book made me reflect; as a soon to be commerce graduate entering the corporate world, what can I do to make the world better?

Businesses are running exactly as they’re designed to given the current incentive structure. With the vast majority of the world’s biggest and most influential companies centered around maximizing short-term profit for quarterly earnings, long-term value creation for society is left as an afterthought, or worse, dismissed as lofty goals hindering the company’s growth. If we only expect businesses to take actions to maximize their share price (and tout this narrow way of thinking as fiduciary responsibility), then that’s all we’ll get. But as we enter the workforce and later move into management level positions, shouldn’t we be questioning the historic design of businesses and make changes so companies are run in a way that actually benefits all stakeholders in the long run and not just the pockets of shareholders in the short-term?

This book made me think a lot from the perspective of a business major entering the depths of the corporate world, but it also made me think about my role as a citizen in my community. Recognizing the place of privilege that I come from, I need to ask myself, what can I do in my life to reflect my values? Sure, it’s fair to and we should be expecting more from our governments and major business leaders, but we should also hold ourselves to a similar standard and think about how the decisions we make reflect our values. Tactically, this can look like being conscious of what you’re supporting when you spend your money and making sure to participate in every election/vote.

I wish the authors could’ve provided more guidance on specific steps we/executives/governments could take to move towards a world of citizen capitalism, but overall I learned a lot reading this book and I highly recommend it to any soon to be or recent business student graduate! I’m leaving this book with a sense of hopefulness of the role businesses can play in society, and I daresay, even a little excitement to graduate and start adulting.

[Charles Kitzinger · Rating 5 out of 5]

This book has changed who I want to be as a citizen, employee, manager, parent, and consumer. It's a spectacularly-written work that raises difficult questions about the type of capitalistic society we live in AND proposes real changes that humans across the economy can take to build towards a more sustainable type of capitalism and future. Capitalism is not bad, it just needs some changes; this book bridges that gap.

Shockingly readable with its clear, short sections and real-world examples of companies that may end up on different sides of history, I leave with a better understanding of the history of our current form of capitalism and a clearer view on what I believe is important for our future.

This is not your conventional book on capitalism that belongs in an office bookcase; this is literature for every human that lives in an economy and has a vested interest in Earth being a sustainable and pleasant place to live. It speaks to actionable changes that could be made by anybody. This will sober anybody who shops at grocery stores, works at a small business OR large corporation, owns any investment, has a right to vote in an election or a shareholder meeting, and who has been educated on capitalism.

This book challenges my thoughts on giving, how I and the companies I see or work in consume resources, how a discounted cash flow is calculated, the metrics that I will manage towards as a business leader, what I eat and buy and where I buy it. It changes the way I think about divestment and CSR teams. It spurs me to become a more involved voter in shareholder topics and to use the small voice I have. It makes me understand the COMMON shareholder and creating value for that individual.

In the blame game played between corporations and government on who can help solve climate change and short-term thinking, it helps me realize that business has so many more cards to play based on the dollars it can impact. As a Millennial seeking to find meaning from work and also more invested in a sustainable future than past generations on average, this is a must-read to set the world on a healthier path.

I cannot recommend this book enough. It's important.

[Diane Foo · Rating 4 out of 5]

Corporations have a lot to answer for and capitalism has become both the boon and bane of modern civilisation. Looking at the way things are going, capitalism will truly be the ruin of us if companies do not take accountability and society does not express its demands for sustainability through consumption behaviour.

This book charts the evolution of corporations from its humble beginnings to exist in order to provide a public good (such as building railways), to becoming a ruthless profit maximisation funnel beholden to shareholders, destroying the planet in its path. While we now see the tide changing and sustainability at the forefront of most large companies, the challenge is in ensuring most of it is not just greenwashing and that there are actual changes in business models, which are the crux of the problem. As one case study detailed, lofty sums of 'after-the-fact' philanthropy do not make right any business operations that results in environmental degradation and exploitation of workers.

Although the book introduced me to some interesting concepts on the problems with capitalism, its proposals for solutions were not as insightful as I had hoped and are already being applied by many companies. Nevertheless, it was an optimistic and inspiring read, well-explained through several case studies.

Ultimately, society always has the power to make capitalism work for citizens and the planet, and we should wield it - through our shopping habits, by making our voices heard and taking action through our employers, the capitalists themselves.

[Jacob Stern · Rating 5 out of 5]

Accountable: The Rise of Citizen Capitalism is a book for our time. It makes for a high-quality, approachable, and very contemporary companion to Thomas Piketty's "Capital in the Twenty-First Century."

O'Leary takes a Michael Lewis-esque approach to breaking down complex dynamics at the heart of corporate capitalism. Chapter 7 - in which O'Leary explains how unintended consequences from government interference has led to a ratchet effect in executive pay, and could lead to a similar dynamic for share buybacks - is particularly strong in this regard. The use of approachable language and metaphors left me with confidence that I understood what was happening, and why.

The book's call for "Citizen Capitalism" rings true. O'Leary highlights a handful of examples where people voting with their dollars and their feet have had a material impact on corporate actions, and calls for much more: "We must reject the ideology that says private vice makes for public virtue, that corporations can aspire to nothing more than maximizing profit. Our business leaders must take the first step, but the rest of us should push them to do so. And we should meet them halfway when they do." O'Leary makes a clear-headed, optimistic case for reforming, rather than scrapping, capitalism, and I leave this book with more optimism than I came to it with.

[Sean Dunlop · Rating 3 out of 5]

Espoused some interesting ideas, in effect boiling down to-- "don't focus on virtue signaling and individual action, but also make sure you vote, both politically and in your ownership decisions." Shareholder activism is important, but less accessible to non-HNW investors.

There are certainly benefits to long-termism, or making decisions with a years-long or decades-long lens-- in those cases there doesn't have to be an explicit tradeoff between what's good along ESG lines and what rewards shareholders, in many cases, simply because investing beyond the next couple of quarters has, historically, generated excess risk-adjusted returns (just ask Warren Buffett). That said, a handful of the cited figures were framed in a manner that could be best described as "incongruous" with the underlying data, if not in a manner that's outright disingenuous-- for example, comparing stock market capitalization in aggregate against annual charitable contributions (which are more akin to a dividend and should be capitalized for an apples-to-apples comparison). Nevertheless, an important contribution to the discussion of shareholder activism (citizen activism) and probably merits a read.

[Christopher Haugh · Rating 5 out of 5]

This book is a sage account of where our system of capital has gone wrong and how we can overcome what has afflicted our business culture for too long. ACCOUNTABLE reads like Gladwell or Lewis fused with a practitioner's wisdom and a healthy dose of optimism for where we could go if we commit to a better way. This book turns one's understanding of the market, impact investment, and business writ large on its head. It retells the story of the corporation and reminds readers of what that word once meant and could mean again. Under the theory that "ownership matters," O'Leary and Valdmanis make a compelling argument for a more compassionate, long-term, and equally as growth oriented capitalism -- one that doesn't exist that far away from where we stand today. It's the kind of argument that will persuade even the crankiest or least engaged shareholder, 401(k) owner, or MBA student to pick up their phone and call their broker, congressperson, or both immediately.

[Sarah Britton · Rating 5 out of 5]

A great read! Accountable combines my favorite elements of a Malcolm Gladwell book (well-written, engaging, full of interesting stories and facts) with big ideas on the level of Piketty’s Capital. O’Leary and Valdmanis bring a perspective that was new to me, joining a belief that capitalism can be good for the world with a clear-eyed analysis of how and why it fails and ultimately how we as citizens, consumers, investors, etc. can push things in the right direction. Early on, they quote the head of the Ford Foundation in what would be a perfect epigraph for the whole book: “We can see how our capitalist systems have broken down while also appreciating that markets have helped reduce the number of people around the globe who live in poverty. Within this kind of complexity I believe we can find reason for hope.” I especially liked the last few chapters, which lay out a path through an imperfect and entrenched system toward this hopeful future.

[Andy · Rating 2 out of 5]

The book does a lot of explaining about problems (like the Friedmanite belief that the only thing that matters is profits) and then critiquing pseudo-solutions that the authors don't like (like divestment campaigns). And then finally one gets to some proposed solutions but those just sound like wishful thinking about how big business will benevolently respond to social demands.
That seems a lot like the problem he's critiquing in the first place of trusting big business. Friedman argued for instance that corporations can't be racist because that would be bad for business. Presumably keeping employees too poor to support themselves and buy your products would also be bad for business, and yet that keeps happening. As would fomenting distrust, which makes commerce impossible.
I guess I missed something.

[Wendy · Rating 5 out of 5]

Great nuanced book challenging shareholder primacy and fiduciary absolutism’s status quo to one that benefits all long term with more socially impactful and environmentally friendlier initiatives. We need to stop sucking money and profits for the benefit of the few. Even believers of Adam Smith’s invisible hand is supposed to be a nuanced philosophy where the wealthy are still supposed to give back to the common good due to their economic privileges. Citizen capitalism is important to place pressure to the top to change systems. This book also offers a glimpse as to why we can’t only have government regulations - we need businesses to also set standards and be held responsible without constantly needing regulations. Great book and highly recommend for anyone interested in challenging capitalism as it is now.

[John Treadgold · Rating 5 out of 5]

Michael is renowned for his work as an impact investor, and I was pleasantly surprised when I realised this book covered a much broader range of topics than just investing. It explored the relationships between companies, customers, investors and the impacts they all have on the environment.

The case-studies were unique and eye-opening, and the book used an engaging narrative structure that kept me engaged and excited the whole way through.

This book is for anyone who is worried about the direction business and finance is heading, and hopefully it will make many people realise that we, the people, actually have a lot of power to influence and resist.

It's up to us to keep them 'accountable'.

[Rick Watson · Rating 5 out of 5]

I read the first chapter of Accountable: The Rise of Citizen Capitalism last night, and I was equally impressed by (1) the scope of the task, (2) the engaging prose style, (3) the frequent and seamless use of references from a wide range of fields, and (4) the manner in which the purpose and structure of the book is presented. I am a total layman regarding Finance, yet the argument of Accountable unfolds in a way that will resonate with anyone with a liberal arts background -- in fact, unlike much business writing, the introduction seems to honor a broad liberal arts viewpoint. Looking forward to digging in more tonight!

[Todd · Rating 3 out of 5]

An enjoyable, educational look at the idea of "stakeholder capitalism", where companies should push for more than just pure profit, but also making a positive impact for employees, customers, and the world as a whole. Essentially, how can companies be more sustainable long-term - leading to long-term profitability while acting as a good corporate citizen? This book is structured as sort of a financial version of a sociological book like Gladwell and similar authors, where real-life stories are tied together to make a broader point.

[Shanu Mathew · Rating 5 out of 5]

Really fantastic book. Filled with great hypothetical questions, well researched academic data, and powerful real-life case studies. Makes fantastic points about the pros and cons of capitalism - at least how we’ve constructed it - and why it can be such an engine for good. Only minor criticism would’ve been focusing more on how we can build companies to be long-term focused and accountable, which it touches on briefly at the end. Highly recommend to folks both in/out of business!

[Bee Evans · Rating 4 out of 5]

Made me think about divestment, shareholder engagement, and CSR / ESG / accounting. Fundamentally I am not convinced doing something is good enough when it comes to big pharma, major polluting companies, fast fashion, or finance - and I think this book is clear on what more is needed within the capitalist framework but doesn’t push enough for the changes we need in equity and equal opportunities globally today.

[Sara Goodison · Rating 5 out of 5]

Loved this!! I am not a frequent reader of business books but so glad I picked this one up. It’s wonderfully written and very engaging—lots of great stories and anecdotes to make the topics tangible. Found myself going “huh!” multiple times even in the first few pages. Learned a lot, definitely recommend!

[Fernando Rodriguez-Villa · Rating 3 out of 5]

I (and I bet most readers) are already in the "converted" camp so I can't say it rocked my world as much as it supplied the arguments (and examples) to articulate nagging feelings I've had about business and finance our the course of my own career. I think there are ways we can use it as a guide to positioning (and perspective) going forward.

[Tara Jenkins · Rating 5 out of 5]

You must read this book! It's a holistic, systemic look at capitalism and the way it's been deliberately built against the greater good over the past 50 years, while providing hope for how we can recapture capitalism to serve us all with specific, practical steps.

[Daniel McDermott · Rating 5 out of 5]

I loved this book so much. With more time on my hands due to quarantine, I decided to go outside of my comfort zone and am so glad I did.

I learned so much and have had a ton of debates about the merits of citizen capitalism with my friends.

Definitely give it a read!

[Clay · Rating 4 out of 5]

Clear and understandable even without an MBA, “Accountable” makes the argument for a long-term investment in our future. When you finally put it down it’s hard to even remember why corporations chase quarterly returns.

A business book for the rest of us.

[Sarah · Rating 4 out of 5]

Great introduction to ESG investing and proxy voting. Lots of facts and figures and quotes that can be repurposed to convince others of the importance of citizen capitalism. Writing was pretty solid too.

[Samantha Weil · Rating 4 out of 5]

Entertaining while talking about the philosophy, history, and challenges of companies today. Informs readers on the options they have to invest ethically, though sometimes hard to follow. Tackles a lot in a short amount of pages.

[Divyesh Sheth · Rating 4 out of 5]

This is a thought provoking book on a new way of running corporations. Most companies today are focused on maximize g shareholder returns. They need to start focusing on other stakeholders to ensure we take care of socitial issues.

[Sarah · Rating 5 out of 5]

Honestly one of the best books I’ve read all year.

[Jrwren · Rating 5 out of 5]

Oh how I wish this all comes to pass.

[Ietrio · Rating 1 out of 5]

A toxic book from two toxic authors, all ready to take decisions over what you own, for your own good, of course.