Stakeholder capitalism, Mr. Finlay said, is based on the straightforward idea that what corporations do, or do not do, has a heavy influence on matters that are society’s most pressing concerns – the health of customers and workers, the livelihoods of employees and whole communities, women’s equality, causes such as the freedom of blacks in South Africa, environmental safety, and the integrity of financial and capital markets.
Ronald Anderson, columnist for The Globe and Mail, in “Corporate ethics a concern for all,” July 1986.
Areputation for prescience has become his professional signature. From the governance failures that produced the collapse of Confederation Life and Northland Bank in the 1990s and the fall of Lehman Brothers, Bear Stearns, Nortel and Hollinger years later to the arrival of ESG in the boardroom, J. Richard Finlay’s insights and predictions read like a chronicle of seismic change foretold. He founded and heads The Finlay Centre for Corporate & Public Governance, and is one of North America’s most impactful and longest cited voices for sound boardroom practices, sanity in CEO pay and the ethical responsibilities of trusted leaders.
His work and ideas and have left an indelible imprint on public policy and on the attitudes and expectations that shape the role of the corporation in modern society. Over the years, his advice has been sought out by three prime ministers of Canada and an impressive gallery of national figures and corporate leaders. It was his proposal, along with years of stalwart advocacy, that led to the creation of the royal commission on Canada’s economic future. The commission was headed by the late Hon. Donald S. Macdonald, former finance minister of Canada, to whom Richard introduced his idea for the commission and had several discussions prior to its announcement.
In private practice, he has counselled and participated in the founding and strategic revitalization of major corporate players and public institutions. In the 1980s he played a pivotal role in Canada’s first ethical investment funds and coined the term stakeholder capitalism. His work and prolific writing defining the promise of social responsibility, environmental stewardship, sound governance and a culture of integrity beginning in the 1970s was the precursor of today’s ESG.
Richard’s leadership has been widely recognized for its contributions to landmark legislative and regulatory reforms, including appearances before committees of the Toronto Stock Exchange, the House of Commons, the Canadian Senate and numerous regulatory authorities. Many of the boardroom practices that are generally accepted today were first proposed and given voice through the persuasiveness of his testimony and writing.
It was on his advice, following the collapse of Northland Bank and Confederation Life, that the Senate Banking committee held its first hearings into corporate governance. In 1994, Richard was the first witness to be designated an expert in corporate governance in the history of that storied committee.
As scandals unfolded as predicted at Bre-X, Livent, YBM Magnex, RT Capital, Nortel and Hollinger, legislators and regulators turned again to Richard for his prescriptions for reform and advice in drafting new corporate governance standards. He was the first to bring governance failures at the IMF and the New York Federal Reserve to public attention, triggering extensive discussions among legislators around the world.
In the 1970s he was the first corporate voice to speak out for more women in the boardroom, for greater gender parity in pay and for diversity of backgrounds around the director’s table. He remains among the most vigorous proponents of these values, too long delayed in their achievement, today.
His early and highly published warnings about consequences of directors who do not direct and the dangers of excessive CEO pay foreshadowed a tidal wave of boardroom collapses and shareholder revolts leading to the financial crisis of 2008. BusinessWeek captured his warnings in their cover story article, “The Crisis in Corporate Governance”.
Richard has worked with prominent journalists in breaking top news stories around the world. He has appeared on CBC, BNN Bloomberg, CBS radio network and in leading publications, including The New York Times, BusinessWeek, Wall Street Journal, New York Post, Newsday, Canadian Business Magazine, Maclean’s, The Globe and Mail, Financial Times, Bloomberg, Toronto Star, Associated Press, Reuters and the Harvard Law School Forum on Corporate Governance. His work has also been profiled in major publications and in several languages in the UK, Europe and South America and cited in numerous best-selling books, including Peter C. Newman’s Titans.
An award-winning writer, Richard was a frequent contributor to The Globe and Mail and Financial Post, where he regularly broke stories that had not been reported anywhere else. He was the first to call for public hearings into the appointment of supreme court nominees in a column in The Globe and Mail in 1987. For many years, his insightful and frequently provocative comments were published on FinlayONgovernance, where they became must reading for lawmakers, regulators and business leaders around the world. Because history is a compelling teacher when daylight shines on it, many of those columns have been recently re-published along with fresh perspectives on issues of the day. His perceptive insights can also be found from time to time in Financial Times and The New York Times.
Illuminating the evolution of private enterprise and public trust over four decades. The Finlay Centre for Corporate & Public Governance is the first and longest running think tank of its kind capturing the promise of the well-governed organization and the ethical practices that shape it.
“For every major corporate policy, decision or public explanation, more and more people are asking: Is it right? Is it fair? And most perplexing of all for the board of directors: is it in the public interest?
It now seems clear that the profitability and economic performance of a corporation will increasingly cease to be the sole criteria by which it is judged. A new set of legitimizers of public consent is coming to the fore, accelerated and strengthened by the harsh realization of the fragile interdependence that links our economy, our society and our environment.” ~J. Richard Finlay, Business Quarterly, 1979.
J. Richard Finlay, Business Quarterly, 1979.
(Presaging the arrival of ESG by more than 40 years)
“Sound governance is not some abstract ideal or utopian pipe dream. Nor does it occur by accident or through sudden outbreaks of altruism. It happens when leaders lead with integrity, when directors actually direct and when stakeholders demand the highest level of ethics and accountability.”
J.Richard Finlay — Addressing the Standing Committee on Banking, Commerce and the Economy, The Senate of Canada, 1994, one of a number of apperances before the committees of the Parliament of Canada.
J. Richard Finlay was the first witness ever to be designated an expert in corporate governance by the Senate Banking committee.
The Financial Times, August 2023
The New York Times, August 10, 2023