What is Steward Ownership

How Steward Ownership can be a way to protect a meaningful purpose.

When we talk about sustainability, we must speak of ownership, too.

But first, a disclaimer. Being a steward-owned company does not make you a sustainable business. It's an enabler, not a guarantee.

Over the last month, we've held keynotes for a wide range of people: CEOs, investors, startups, academics, and students. Although there are various questions, a version of this question always pops up at some point during the Q&A.  

"What can a company do if it's shareholder-owned?"

One way to start a conversation on that topic is to flip the question around and ask what a company can do if it's NOT shareholder-owned. And for that, this quote from Ryan Gellert, CEO of Patagonia, about Steward Ownership is spot on.

"This is not woke capitalism; this is the future of business."

Steward ownership isn't just about legal structures—it's about how you can protect the purpose of the company by:

• 6x the survival rate of your business
• Increase profitability
• Attract and retain top talent

However, steward ownership is about more than just business performance. It aims to solve inequality by creating a fairer distribution of power and money where profits serve the purpose, not individual wealth.

Some of the world's leading companies are Steward Owned, including:

• Patagonia
• Ecosia
• Triodos Bank
• Firefox
• Zeiss
• Bosch

And, as always, a disclaimer. Being a steward-owned company does not make you a sustainable business.

The Problem with the Rules of Business Today

“The rules for businesses today are an ill fit for the ecological challenges of the 21st century.”

Private businesses are incentivized to maximize profits. For publicly traded companies, the issue is even more pronounced—they are legally bound to maximize profits and grow limitlessly.

Since green growth isn’t working (we can’t decouple pollution from economic growth sufficiently and fast enough), we need new ways of running and owning businesses.

What is Steward Ownership?

The Two Key Principles (Defined by Purpose Economy):

1. Profits Serve Purpose
• All profits are used for reinvestment in the company, paying back investors, sharing with stakeholders, or donating to charity. They are not distributed to individual owners.
2. Self-Governance
• Control remains with those actively engaged in or connected to the business. Voting shares are held by stewards, and the business itself cannot be sold.

A Look at Purpose

A Steward Ownership structure is only as good as the purpose it stewards.

Purpose is often misused as a fluffy term, but Steward Ownership ensures accountability through legal measures and oversight. This structure can be a renaissance for purpose-driven business.

For example, the case study on Pura Utz explores how a clearly defined purpose can drive better business decisions.

Why It’s Relevant for Post Growth Businesses:
Most businesses prioritize profit maximization for shareholder value, making sustainability a challenge. By aligning profits with purpose, Steward Ownership provides a mechanism for better, more sustainable decisions.

Control and Independence

Steward Ownership separates economic rights from voting rights, removing control from private shareholders, equity firms, or external stakeholders. This eliminates the incentive to prioritize profit over purpose.

Instead, businesses are controlled by individuals within or closely connected to the organization, representing various interests beyond just economic ones.

Why It’s Relevant for Post Growth Businesses:
Independence allows businesses to make difficult, long-term decisions focused on impact rather than short-term growth or profit.

Steward Ownership is Good Business

A Danish study reveals that Steward-owned businesses have a 60% survival probability over 40 years, compared to just 10% for conventional businesses.

Additional findings:

• Higher profitability makes companies more resilient to crises.
• Steward-owned companies offer higher wages and better employee benefits, attracting and retaining top talent.

References:

• Purpose Economy (2022): Effects of Steward-Ownership as a Corporate Ownership Structure
• Steward-Ownership is Capitalism 2.0
• Podcast: The Ownership Economy, Episode 055