Case-study anchor: BP plc · Strategic Reset under Murray Auchincloss (2024 to 2026, live). Positive contrast: Ørsted A/S · pivot under Henrik Poulsen (2012 to 2020, decisive divestment 2017).
Three things to carry forward
- Stakeholder theory is normative before it is instrumental. Donaldson and Preston's three-theories distinction (descriptive, instrumental, normative) is the underused frame. Most boards adopt the language at the instrumental level, "doing well by doing good", and then drop the language at the moment a stakeholder claim becomes commercially expensive. Freeman's theory, at its foundation, is normative. The instrumental version is the easy version. The normative version is the one that holds under pressure.
- The Ethical Residue Test is the line between Freeman and Friedman. After a board re-weights a stakeholder's claim downward, can it articulate the ethical claim of the displaced group, in terms the displaced group itself would recognise? If yes, the board is still inside Freeman's theory. If no, it is practising Friedman's answer in Freeman's language.
- Same starting point, opposite outcomes. BP and Ørsted began the previous decade in the same sector with similar stakeholder pressures. One did the work the theory demands. One did not. The theory is not the difference. The discipline of applying it is.
A reading
Foundational text
- Freeman, R.E. (1984) Strategic Management: A Stakeholder Approach. Boston: Pitman. The anchor text. Reissued by Cambridge University Press in 2010 with a new preface by Freeman addressing thirty years of critique.
The three-theories distinction
- Donaldson, T. and Preston, L.E. (1995) 'The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications', Academy of Management Review, 20(1), pp. 65–91. The most cited short paper in stakeholder theory. The descriptive / instrumental / normative tripartite is from this article.
The counter-pole
- Friedman, M. (1970) 'The Social Responsibility of Business is to Increase its Profits', The New York Times Magazine, 13 September. Read in full. The argument has been caricatured for fifty years; the original essay is more nuanced than its critics or its defenders typically allow.
The most serious modern critique
- Jensen, M.C. (2001) 'Value Maximization, Stakeholder Theory, and the Corporate Objective Function', Journal of Applied Corporate Finance, 14(3), pp. 8–21. The argument that stakeholder theory leaves directors with no compass. Freeman's response to Jensen, and to similar critiques, is collected in Freeman et al. (2010) Stakeholder Theory: The State of the Art (Cambridge University Press).
BP · primary record
- BP plc (2020) Reimagining Energy. Strategy presentation, 12 February 2020. Looney's net zero pledge.
- BP plc (2025) Resetting BP. Strategy presentation, 26 February 2025. The Auchincloss reset. Both available via bp.com investor relations archive.
- BP plc, Annual Report and Form 20-F, financial years 2020 to 2024, for the longitudinal record of capital allocation, target setting, and remuneration design.
- Lund, H. (2025) Statement on chair succession, 4 April. BP press release.
Ørsted · primary record
- Ørsted A/S, Sustainability Report and Annual Report series 2012 to 2020, for the longitudinal record of the divestment programme, the renaming, and the offshore-wind capacity build-out.
- Poulsen, H. (2020) Interview with the Harvard Business Review, How Ørsted Transformed Itself From a Fossil-Fuel Company Into a Renewable-Energy Leader, March 2020. The cleanest first-person account of how the board sequenced its stakeholder communication.
A question
If you asked your board today to name the five stakeholders whose claims are being downgraded by the current strategy, could they name them, and could they articulate the ethical justification for downgrading each, using a moral logic the stakeholder itself can comprehend, even if it would fiercely contest the outcome?
If the answer to the second part of the question is no, your board has left Freeman's theory whether it knows it or not.
The wider library
This Note sits at the heart of the BP spine in the Strategy Room. The BP case anchor is the only sanctioned cross-Note exception in the Library, per Master Blueprint §2.6 ownership-vs-reference. BP appears in Strategy Notes 09 to 15 and in the BP Strategic Stack Whitepaper. No other Library Note may extend the BP case anchor.
This Note connects directly to:
- Strategy Room Note 08 (PESTLE Analysis · Post Office). PESTLE tells you what is changing in the macro-environment that will adjust stakeholder claims themselves. Freeman tells you whose claims those are.
- Strategy Room Note 10 (Mendelow's Stakeholder Matrix · BP). Freeman tells you who is in the room. Mendelow tells you how much power each holds and how engaged each is. The two frameworks are complementary, not competing.
- Strategy Room Note 11 (Agency vs Stewardship · BP). Freeman names the stakeholders. Agency and stewardship theory tell you whose behaviour the board structure is trying to shape inside the coalition Freeman maps.
- Strategy Room Note 14 (Shareholder Primacy vs Stakeholder Capitalism · BP). The ideological argument that decides which stakeholder's interests carry the most weight in the board's decision rule.
- Strategy Room Note 15 (BP Strategic Stack · Synthesis). The closing synthesis Note that pulls all of the BP-anchored Notes together. Note 09's contribution to the synthesis is the Ethical Residue Test as a discipline applicable across all six lower-Note frameworks.
Ørsted A/S has been added to the Topic Boundary Note as a sanctioned positive-contrast example for stakeholder-theory applications. Ørsted is not a case anchor in any other Library Note and is not extended beyond this Note's positive-contrast role.