Our conclusion is that alternative forms of ownership (steward ownership, employee ownership and community ownership) can indeed do this! Nuance is warranted, however. Big differences do exist between different versions of alternative ownership and their actual implementation. Those nuances often matter most. Furthermore, much depends on which central goal replaces the traditional focus on short-term profit.
Across all three alternatives, the variation within each category might be just as big as the variation between them. Alternatively owned organisations can be big or small, privately owned or stock-listed, involve large groups of people or keep power narrow and concentrated. Some distribute decision-making power democratically, while others just offer employees a bit of profit to ensure they work hard.
Alternative ownership can work
In the majority of cases*, we can conclude that the alternatives succeed in doing at least one thing: short-term profit is no longer automatically the dominant measure of success. Instead of prioritizing shareholder value above all, each model introduces a new central aim (or several) to guide strategy and decision-making.
*the main exception is Employee Stock Ownership Plans, where the traditional shareholder model remains almost completely intact. Note also that not every organisation that is shareholder-owned behaves like a pure profit-maximiser in practice.
The nature of this new central objective matters greatly. Saying goodbye to shareholder dominance does not automatically lead to a more social or sustainable orientation. Steward-owned companies can pursue missions whose contribution to society are questionable (such as the Carlsberg example of “brewing beer for a better tomorrow”).
Partnership structures are notoriously competitive and financially motivated, showing little sign of a specific mission, even though they are technically a type of employee ownership. Community-owned organisations can have as their only goal to obtain the best possible price for a group of producers (for example with FloraHolland or FrieslandCampina). It can be argued that this type of collective bargaining power is a form of social sustainability for the producers. However, it can be argued just the same that it is merely a financial strategy with limited broader societal value (or even one that rips off customers).
None of this means that alternative ownership forms are irrelevant, not at all. On the right terms, they can help pursue societal value in a broad sense. In practice, the likelihood that an organisation pursues broader social and environmental goals depends not only on its ownership model, but also on the exact governance. When this group is larger and more diverse (as is for example the case with broad and deep employee ownership), aims tend to align more with societal interests.
So, we can conclude that pursuing societal value seems to be an issue not just of altering ownership, but of redistributing power. Embracing alternative forms of ownership can indeed help us move to a more sustainable society, on the conditions that 1) the central aim(s) reflects societal interest(s), which is more likely to be the case when 2) those setting the aim(s) are a broad and inclusive representation, approaching the diversity of society as a whole. In those cases, alternative forms of ownership truly live up to the hype.
Promoting alternative ownership
Yet today, we are not using them to their full potential. When looking for financing, organisations with alternative forms of ownership mostly seem to face challenges in the early stages. Once up and running, loans are usually a suitable and achievable way of financing regardless of ownership forms.
But in the early stages, debt financing is unsuitable. Types of financing geared towards dealing with early-stage business risks (mostly equity financing) are not fit for our three alternatives: obtaining equity finance generally involves (partly) giving up control, which is a no-go for most alternatively owned organisations. There seems to be a lack of financing forms suited to early-stage financing of alternatively owned organisations.
Solutions exist but are hardly known both among both organisations and investors. Private financial institutions looking to accelerate transitions could try to fill this gap. On the regulatory side, legally standardising and (financially) incentivising alternative ownership forms could help promote their spread, too. For citizens and consumers, learning about alternative ownership and consciously choosing to do business with these organisations would further boost their development.
All in all, alternative ownership models are clearly a necessary if not sufficient element of the transition towards a sustainable economy. By redistributing power, they bring in societal interest in a way that is often lacking in traditional shareholderism. The more broadly owned and democratically governed the organisation is, the higher the chances that this broadening of interests will take place and be effective.
However, if we truly want the concept of alternative ownership to live up to its potential, some challenges still need to be overcome. Both regulatory and financial innovation can help accelerate the adoption of alternative ownership models, alongside businesses who dare to experiment and consumers who offer their support.