Mariana Mazzucato: CEOs Should Be Contracted to Hit Goals

Why It Matters

Linking executive compensation to measurable public‑good outcomes could reshape corporate strategy, boost private‑sector investment, and accelerate climate and social targets. For investors and policymakers, it offers a concrete lever to align profit motives with societal needs.

Key Takeaways

• Goal‑oriented CEO contracts could align profit with public good
• UK’s low private‑sector investment ranks 28th OECD, hindering reinvestment
• France tied airline/auto aid to carbon‑reduction, unlike UK’s unconditional aid
• Entrepreneurial state model partners with business to pre‑empt market failures
• Predistribution builds upfront community benefits, avoiding later redistribution costs

Pulse Analysis

Mazzucato’s latest book, *The Common Good Economy*, reframes the debate about corporate purpose by insisting that CEOs be contractually bound to public‑good outcomes. She points out that the Sustainable Development Goals and recent UK missions have stalled because they lack enforceable metrics tied to executive pay. By converting lofty ambitions into concrete performance clauses—such as net‑zero emissions or universal vaccine access—companies can internalize societal costs and avoid costly retrofits later. This shift mirrors the broader push for ESG‑linked compensation that investors increasingly demand.

The contrast between policy approaches in Europe underscores the power of conditional funding. France conditioned billions of euros of support to Air France and Renault on verifiable carbon‑reduction milestones, while the UK handed roughly £600 million (≈$760 million) to easyJet without any environmental strings. Similarly, German steel subsidies were tied to material‑use innovation, prompting measurable efficiency gains. Mazzucato argues that an "entrepreneurial state" should replicate these models, using public capital to compel private reinvestment and ensure that profits are shared back into infrastructure, such as modernizing Thames Water’s aging network.

For CEOs and boards, the proposal translates into a new risk‑reward calculus: meeting contractual societal targets becomes a prerequisite for bonuses and equity awards. This could revive private‑sector investment, which currently ranks 28th among OECD nations, and restore confidence in long‑term planning reminiscent of China’s multi‑decade strategies. Moreover, the concept of predistribution—building equitable benefits into contracts from the outset—offers a proactive alternative to after‑the‑fact redistribution, aligning labor, capital, and community interests. As regulators and investors gravitate toward outcome‑based incentives, Mazzucato’s framework provides a pragmatic roadmap for embedding the public good at the heart of corporate governance.