麻豆区

No Mere Tempest in a Teapot: 鈥楥orporate Purpose鈥� and 鈥楽takeholderism鈥櫬�

When the (鈥淏RT鈥�), an association of CEOs of leading U.S. corporations with some 20M employees and an 18Tr stock market capitalization, issued its on 19 August 2019, it only took hours for a debate to unfold, which continues to this day, almost 3 years later. At the center of the debate is not just an expansion of the corporation鈥檚 stakeholders to include a wider range of its constituencies and interest-holders, but a transformation of the corporation鈥檚 place in a dramatically changing environment. Among the key drivers of a shift to a more comprehensive understanding of 鈥榮takeholderism鈥� are the recognition of the corporation鈥檚 stakes and responsibilities in continuing climate change, in the privatization of formerly and quasi-public functions, the pertinent discrimination and marginalization of minorities and vulnerable populations and in the sustenance of exploitative production conditions across global value chains. Stakeholderism, then, marks not only a quantitative but 鈥� decisively 鈥� a qualitative shift towards the recognition of the corporation as a laboratory and forum for the negotiation of societal interests with a view to the future. It is this expansion of corporate governance as an ideas and policy field that this note focuses on, highlighting the importance of the wider substantive range of issues now considered to be relevant for corporate boards and the growing role of corporations themselves in shaping the regulatory landscape in which they operate.听聽

The BRT manifesto was in 2019 by CEOs of 181 companies and by August 2021 this number had risen to 243. The Statement鈥檚 key commitment to 鈥榓ll stakeholders of the corporation鈥� was aimed directly at the principle of shareholder value maximization that had been the gold standard for decades and had attained quasi-universal acclaim during the 1980s and then in the decade after the end of the cold war 鈥� a period marked by an explosion in global financial flows, foreign direct investment and M&A activity.听聽

The Roundtable鈥檚 intervention occurred ten years after the global financial crisis, almost twenty years after 鈥楨nron鈥� and thirty years after the collapse of communism. It was released, as we know in retrospect, still at a 鈥榩re-pandemic鈥� moment in time and thus found itself put to a considerable test in the years since its publication. While a September 2021 revealed that shareholders were still coming out ahead of other stakeholders in the race for corporate attention and diligence, much suggests that the context of corporate business and the conversation around it have changed 鈥� perhaps irreversibly. While there is resistance, few will seriously doubt that 鈥淸t]he COVID-19 pandemic, as an exogenous shock with the potential to change many aspects of the economy, will by turning around a number of trends and accelerating other shifts that have already begun during the past ten years.鈥澛�

Such trends, it is important to remember, don鈥檛 emerge or unfold in a vacuum, but in a contested space. So, while it is more and more acknowledged that, as Professor Kishanti Parella notes, 鈥減oor corporate track record on climate change, data security, executive compensation, workers鈥� rights, and consumers鈥� rights have 鈥�, it is also true that 鈥淸s]takeholderism critics fear that corporate leaders may use stakeholderism to re-establish their legitimacy and prevent regulation through voluntary measures.鈥澛�

What emerges is not a Utopia but a fresh perspective and a number of new prospects of a more sustainable economic system and the place of the business corporation 鈥� and its manifold stakeholders 鈥� in it. As Chris Brummer and Leo Strine in a new lead symposium article, 鈥溾��corporate law itself has a positive role to play in supporting corporations in taking ambitious actions to promote DEI and contributing to a more inclusive and fair economy and nation.鈥� Their intervention, Lisa Fairfax shows, occurs in a context of growing discontent and an amplification of critique regarding the long existing and equally neglected .听

聽Stakeholderism not just a logistical, but a cognitive and political challenge聽

As we are trying to understand the current moment of 鈥榗orporate purpose鈥�, ESG as well as under the auspices of 鈥淒EI鈥� in drawing on #MeToo, #BLM and #RacialCapitalism, it is important to consider the context: corporate governance norm creation is not just a matter of governments and courts. Instead, we need to acknowledge and appreciate the immense role played by private practitioners, in-house counsel and business consultancies in their creation.听聽

The significance of what the Business Roundtable put 鈥榦n the table鈥� in 2019, is undeniable in both a practical and theoretical-conceptual sense. There is no law firm today, from those with 1,000s of employees to those comprised of a 2-3 person operation, which does not acknowledge the need to advise their corporate and commercial clients on how to address the fast changing expectations. The range of these expectations signals an important diversification of stakeholder interests which are being articulated in relation to companies, their products but also with regard to how they are governed and how the company monitors what happens on the level of their suppliers. Interestingly, the before-clear dividing line between the expectations of investors on the one hand and 鈥榮ociety at large鈥�, including employees, the environment and other groups, on the other, appears to have gotten blurry at least. Combined, there is substantive pressure on companies to actively manage and improve the diversity of their staff, including the composition of their board, clearly adopt and communicate their stance on , develop strategies to eradicate in their warehouses and throughout their , report on their overall efforts to contribute to a in the long run and to meet the staggering challenges arising from , and head-on.听

That said, the 鈥榖usiness environment鈥� and its regulatory landscape have changed significantly even since the 2002 passage of SOX in the immediate aftermath of Enron鈥檚 and WorldCom鈥檚 implosion. Omitting the 鈥榮鈥� for 鈥榮ocial鈥� out of the phrase 鈥樷�� was, at the time, a clear signal directed at shareholders whose confidence the act, above all, was meant to restore. Today, it becomes visible how much has changed since the 鈥榗orporate social responsibility鈥� (鈥淐SR鈥�) disputes in the 1930s. There is, e.g. in 鈥檚, 鈥檚 and 鈥檚 commitments to battle 鈥榤odern slavery鈥� and the of supply chain and modern slavery legislations in the , , and , a much more expansive range of concerns and expectations which companies, and, notably, the , and accountants that advise them, are asked to address.听聽

Visions, Choices and Strategies for Business and Government alike聽

Today鈥檚 business climate is both intensely local and global. It is constituted by the struggle for survival of the next coffee shop after pandemic lockdowns, by the gig worker facing the choice of driving for Uber or Prime in addition to her already existing precarious jobs, by the single parent trying to maintain employment with recurring kindergarten closures, and by the Amazon warehouse worker contemplating whether or not to join their colleagues鈥� brave struggle for unionization. For workers, the incessantly hypothesized 鈥榬eturn to normal鈥� is not a choice between 鈥榟ome office鈥� and 鈥榞oing in for work.鈥� For many, their employment or lack thereof is a quotidien matter of . Corporations and an expanded range of stakeholders including workers are in this process of recovery and reconstruction . That, however, requires a fundamental shift in the , informed in part by an appreciation of the in work and employment through financialization, privatization, and technological change, and in part by a critical revisiting of how law has and continues to provide the for these changes, whether we focus on DEI and ESG as core dimensions of corporate governance or on a legal for global supply chains.听

What can be discerned from this brief and cursory snapshot? At a minimum, that 鈥� as William Savitt and Aneil Kovvali convincingly 鈥� the push for companies to take the BRT鈥檚 cue for a more inclusive approach to stakeholder governance does not logically disincentivize regulatory and legislative intervention as repeatedly by Lucian Bebchuk and his co-authors. Rather than forcing a choice between regulatory intervention and voluntary self-regulation, it is instead the recognition of a fundamentally broadened substantive arena and a sociologically more hybrid, public-private and national-international regulatory landscape which provides the context in which corporate decision-making is taking place today. This environment, not the simplified trade-off between 鈥渟tate鈥� and 鈥渕arket鈥�, creates immense opportunities for a dialogue and collaboration across different actors towards developing structures of forward-looking, critically informed corporate governance.听

As the of such options is now well under way we must appreciate and again embrace an understanding of law as a forum, as a site of engagement, and a toolkit with which to engage in a democratic manner. Such engagement, then, is not confined to choices between 鈥榩olitics鈥� and 鈥榤arkets鈥� or between 鈥榠ntervention鈥� and 鈥榝reedom.鈥� Instead, law as a site of democratic practice creates and shapes, resists and reforms socio-economic relations. That law鈥檚 forum and regulatory laboratory is today populated by public and private, domestic and international actors and institutions, deliberating, collaborating and at times competing in new, transnational processes of norm creation, is 鈥� actually 鈥� something that practitioners, along with legal sociologists and scholars have long recognized and been engaging with 鈥� with a distinctly inter- and transdisciplinary . Their awareness of this landscape comes with a keen attention to the challenges for existing understandings of legal/political authority, let alone legitimacy. Here, arguably, lie the stakes of stakeholderism for the future.听

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