Valeur actionnariale vs. sociétale | Page 2

À lire cet intéressant article du professeur Licht : Amir Licht, « Varieties of Shareholderism: Three Views of the Corporate Purpose Cathedral », 19 octobre 2020, European Corporate Governance Institute – Law Working Paper No. 547/2020.

Résumé :

This Chapter seeks to make three modest contributions by offering views of the corporate purpose cathedral that bear on the role of law in it. These views underscore the difference and the tension between an individual perspective and a societal/national legal perspective on the purpose of the corporation. First, it reviews a novel dataset on national legal shareholderism – namely, the degree to which national corporate laws endorse shareholder primacy – as an exercise in operationalizing legal constructs. Second, it anchors the two archetypal approaches of shareholderism and takeholderism in personal human values. It is this connection with the fundamental conceptions of the desirable which animates attitudes and choices in this context. The upshot is potentially subversive: Legal injunctions to directors on corporate purpose might be an exercise in futility. Third, this Chapter highlights the importance of acknowledging the tensions between the two levels of analysis by looking at the works of prominent writers. Adolf Berle, Victor Brudney, and Leo Strine have been careful to keep this distinction in mind, which has enabled them to hold multiple views of the cathedral without losing sight of it.

À la prochaine…

Billet à lire de Frederick Alexander et al. : « From Shareholder Primacy to Stakeholder Capitalism » (Harvard Law School Forum on Corporate Governance, 26 octobre 2020).

Extrait :

This policy agenda includes the following categories of interventions required for a broad transition to Stakeholder Capitalism.

We have drafted proposed Federal legislative language, “The Stakeholder Capitalism Act,” attached in Exhibit A of the full paper linked to below, which incorporates each of the following ideas:

Responsible Institutions: We propose that the trustees of institutional investors be required to consider certain economic, social, and environmental effects of their decisions on the interests of their beneficiaries with respect to stewardship of companies within their portfolios. This clarified understanding of fiduciary duty will ensure that institutional investors use their authority to further the real interests of those beneficiaries who have stakes in all aspects of the economy, environment, and society. These changes can be achieved through an amendment to the Investment Company Act of 1940 (15 U.S.C. 80a) by inserting language after paragraph (54) of Section 2 and after subsection (c) of Section 36.

Responsible Companies: Just as trustees of invested funds must expand their notion of the interests of their beneficiaries, the companies in which they invest must also expand the understanding of the interests of the economic owners of their shares, who are more often than not those same beneficiaries. We propose a federal requirement that any corporation or other business entity involved in interstate commerce be formed under a state statute that requires directors and officers to account for the impact of corporate actions not only on financial returns, but also on the viability of the social, natural, and political systems that affect all stakeholders. This change can be achieved through the addition of a new Chapter 2F of Title 15 of the U.S. Code.

Tools for Institutional Accountability: In order to allow beneficiaries to hold institutional investors accountable for the impact of their stewardship on all the interests of beneficiaries, we propose laws that mandate disclosure as to how they are meeting their responsibility to consider these broad interests, including disclosure of proxy voting and engagement with companies. We propose that the Securities and Exchange Commission should promulgate rules requiring each investment company and each employee benefit plan required to file an annual report under section 103 of the Employee Retirement Income Security Act of 1974.

Tools for Company Accountability: Corporate and securities laws that govern businesses must also be changed in order to give institutional investors the tools to meet their enhanced responsibilities. This will include requiring large companies to meet new standards for disclosure regarding stakeholder impact as an important element of their accountability. This proposal can be achieved through an amendment added to The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) after section 13A.

(…)

This tension cannot be wished away. The White Paper proposes a solution: rules that facilitate and encourage investor-sanctioned guardrails. Such guardrails would allow shareholders to insist that all companies that they own forgo profits earned through the exploitation of people and planet. Unlike executives, the institutional shareholders who control the markets are diversified, so that their success rises and falls with the success of the economy, rather than any single company. This means that these institutions suffer when individual companies pursue profits with practices that harm the economy. We believe that by leveling the competitive playing field, these changes will pave the way for the type of corporate behavior imagined by the New Paradigm, the Davos Manifesto and the Business Roundtable Statement.

Indeed, far from being “state corporatism,” as the memo claims, what we propose is “human capitalism,” where the workers, citizens, and other humans whose savings fund corporations are given a say in the kind of world they live in. Will it be one in which all compete in a manner that rejects unjust profits? Or, in contrast, will it be one in which corporations continue to lobby against regulation that protects workers while the corporate executives make 300 times the median salary of workers?

À la prochaine…

Belle tribune dans Fortune de MM. Colin Mayer, Leo Strine Jr et Jaap Winter au titre clair : « 50 years later, Milton Friedman’s shareholder doctrine is dead » (13 septembre 2020).

Extrait :

Fifty years ago, Milton Friedman in the New York Times magazine proclaimed that the social responsibility of business is to increase its profits. Directors have the duty to do what is in the interests of their masters, the shareholders, to make as much profit as possible. Friedman was hostile to the New Deal and European models of social democracy and urged business to use its muscle to reduce the effectiveness of unions, blunt environmental and consumer protection measures, and defang antitrust law. He sought to reduce consideration of human concerns within the corporate boardroom and legal requirements on business to treat workers, consumers, and society fairly. 

Over the last 50 years, Friedman’s views became increasingly influential in the U.S. As a result, the power of the stock market and wealthy elites soared and consideration of the interests of workers, the environment, and consumers declined. Profound economic insecurity and inequality, a slow response to climate change, and undermined public institutions resulted. Using their wealth and power in the pursuit of profits, corporations led the way in loosening the external constraints that protected workers and other stakeholders against overreaching.

Under the dominant Friedman paradigm, corporations were constantly harried by all the mechanisms that shareholders had available—shareholder resolutions, takeovers, and hedge fund activism—to keep them narrowly focused on stockholder returns. And pushed by institutional investors, executive remuneration systems were increasingly focused on total stock returns. By making corporations the playthings of the stock market, it became steadily harder for corporations to operate in an enlightened way that reflected the real interests of their human investors in sustainable growth, fair treatment of workers, and protection of the environment.

Half a century later, it is clear that this narrow, stockholder-centered view of corporations has cost society severely. Well before the COVID-19 pandemic, the single-minded focus of business on profits was criticized for causing the degradation of nature and biodiversity, contributing to global warming, stagnating wages, and exacerbating economic inequality. The result is best exemplified by the drastic shift in gain sharing away from workers toward corporate elites, with stockholders and top management eating more of the economic pie.

Corporate America understood the threat that this way of thinking was having on the social compact and reacted through the 2019 corporate purpose statement of the Business Roundtable, emphasizing responsibility to stakeholders as well as shareholders. But the failure of many of the signatories to protect their stakeholders during the coronavirus pandemic has prompted cynicism about the original intentions of those signing the document, as well as their subsequent actions.

Stockholder advocates are right when then they claim that purpose statements on their own achieve little: Calling for corporate executives who answer to only one powerful constituency—stockholders in the form of highly assertive institutional investors—and have no legal duty to other stakeholders to run their corporations in a way that is fair to all stakeholders is not only ineffectual, it is naive and intellectually incoherent.

What is required is to match commitment to broader responsibility of corporations to society with a power structure that backs it up. That is what has been missing. Corporate law in the U.S. leaves it to directors and managers subject to potent stockholder power to give weight to other stakeholders. In principle, corporations can commit to purposes beyond profit and their stakeholders, but only if their powerful investors allow them to do so. Ultimately, because the law is permissive, it is in fact highly restrictive of corporations acting fairly for all their stakeholders because it hands authority to investors and financial markets for corporate control.

Absent any effective mechanism for encouraging adherence to the Roundtable statement, the system is stacked against those who attempt to do so. There is no requirement on corporations to look after their stakeholders and for the most part they do not, because if they did, they would incur the wrath of their shareholders. That was illustrated all too clearly by the immediate knee-jerk response of the Council of Institutional Investors to the Roundtable declaration last year, which expressed its disapproval by stating that the Roundtable had failed to recognize shareholders as owners as well as providers of capital, and that “accountability to everyone means accountability to no one.” 

If the Roundtable is serious about shifting from shareholder primacy to purposeful business, two things need to happen. One is that the promise of the New Deal needs to be renewed, and protections for workers, the environment, and consumers in the U.S. need to be brought closer to the standards set in places like Germany and Scandinavia. 

But to do that first thing, a second thing is necessary. Changes within company law itself must occur, so that corporations are better positioned to support the restoration of that framework and govern themselves internally in a manner that respects their workers and society. Changing the power structure within corporate law itself—to require companies to give fair consideration to stakeholders and temper their need to put profit above all other values—will also limit the ability and incentives for companies to weaken regulations that protect workers, consumers, and society more generally.

To make this change, corporate purpose has to be enshrined in the heart of corporate law as an expression of the broader responsibility of corporations to society and the duty of directors to ensure this. Laws already on the books of many states in the U.S. do exactly that by authorizing the public benefit corporation (PBC). A PBC has an obligation to state a public purpose beyond profit, to fulfill that purpose as part of the responsibilities of its directors, and to be accountable for so doing. This model is meaningfully distinct from the constituency statutes in some states that seek to strengthen stakeholder interests, but that stakeholder advocates condemn as ineffectual. PBCs have an affirmative duty to be good corporate citizens and to treat all stakeholders with respect. Such requirements are mandatory and meaningful, while constituency statutes are mushy.

The PBC model is growing in importance and is embraced by many younger entrepreneurs committed to the idea that making money in a way that is fair to everyone is the responsible path forward. But the model’s ultimate success depends on longstanding corporations moving to adopt it. 

Even in the wake of the Roundtable’s high-minded statement, that has not yet happened, and for good reason. Although corporations can opt in to become a PBC, there is no obligation on them to do so and they need the support of their shareholders. It is relatively easy for founder-owned companies or companies with a relatively low number of stockholders to adopt PBC forms if their owners are so inclined. It is much tougher to obtain the approval of a dispersed group of institutional investors who are accountable to an even more dispersed group of individual investors. There is a serious coordination problem of achieving reform in existing corporations.

That is why the law needs to change. Instead of being an opt-in alternative to shareholder primacy, the PBC should be the universal standard for societally important corporations, which should be defined as ones with over $1 billion of revenues, as suggested by Sen. Elizabeth Warren. In the U.S., this would be done most effectively by corporations becoming PBCs under state law. The magic of the U.S. system has rested in large part on cooperation between the federal government and states, which provides society with the best blend of national standards and nimble implementation. This approach would build on that.

Corporate shareholders and directors enjoy substantial advantages and protections through U.S. law that are not extended to those who run their own businesses. In return for offering these privileges, society can reasonably expect to benefit, not suffer, from what corporations do. Making responsibility in society a duty in corporate law will reestablish the legitimacy of incorporation.

There are three pillars to this. The first is that corporations must be responsible corporate citizens, treating their workers and other stakeholders fairly, and avoiding externalities, such as carbon emissions, that cause unreasonable or disproportionate harm to others. The second is that corporations should seek to make profit by benefiting others. The third is that they should be able to demonstrate that they fulfill both criteria by measuring and reporting their performances against them.

The PBC model embraces all three elements and puts legal, and thus market, force behind them. Corporate managers, like most of us, take obligatory duties seriously. If they don’t, the PBC model allows for courts to issue orders, such as injunctions, holding corporations to their stakeholder and societal obligations. In addition, the PBC model requires fairness to all stakeholders at all stages of a corporation’s life, even when it is sold. The PBC model shifts power to socially responsible investment and index funds that focus on the long term and cannot gain from unsustainable approaches to growth that harm society. 

Our proposal to amend corporate law to ensure responsible corporate citizenship will prompt a predictable outcry from vested interests and traditional academic quarters, claiming that it will be unworkable, devastating for entrepreneurship and innovation, undermine a capitalist system that has been an engine for growth and prosperity, and threaten jobs, pensions, and investment around the world. If putting the purpose of a business at the heart of corporate law does all of that, one might well wonder why we invented the corporation in the first place. 

Of course, it will do exactly the opposite. Putting purpose into law will simplify, not complicate, the running of businesses by aligning what the law wants them to do with the reason why they are created. It will be a source of entrepreneurship, innovation, and inspiration to find solutions to problems that individuals, societies, and the natural world face. It will make markets and the capitalist system function better by rewarding positive contributions to well-being and prosperity, not wealth transfers at the expense of others. It will create meaningful, fulfilling jobs, support employees in employment and retirement, and encourage investment in activities that generate wealth for all. 

We are calling for the universal adoption of the PBC for large corporations. We do so to save our capitalist system and corporations from the devastating consequences of their current approaches, and for the sake of our children, our societies, and the natural world. 

À la prochaine…

Nouvel article sur la raison d’être par Martin Lipton et al. : « On the Purpose and Objective of the Corporation » (Harvard Law School Forum on Corporate Governance, 5 août 2020).

Extrait :

Recent events—notably including the pandemic, its disparate impact on various segments of society, and the focus on inequality and injustice arising in the wake of the death of George Floyd—have accelerated the conversation on corporate purpose. The result has been substantial, salutary reflection about the role that corporations play in creating and distributing economic prosperity and the nexus between value and values.

For our part, we have supported stakeholder governance for over 40 years—first, to empower boards of directors to reject opportunistic takeover bids by corporate raiders, and later to combat short-termism and ensure that directors maintain the flexibility to invest for long-term growth and innovation. We continue to advise corporations and their boards that—consistent with Delaware law—they may exercise their business judgment to manage for the benefit of the corporation and all of its stakeholders over the long term.

In looking beyond the disruption caused by the pandemic, boards and corporate leaders have an opportunity to rebuild with the clarity and conviction that come from articulating a corporate purpose, anchored in a holistic understanding of the key drivers of their business, the ways in which those drivers shape and are shaped by values, and the interdependencies of multiple stakeholders that are essential to the long-term success of the business.

This opportunity leads us to reiterate and refine a simple formulation of corporate purpose and objective, as follows:

The purpose of a corporation is to conduct a lawful, ethical, profitable and sustainable business in order to ensure its success and grow its value over the long term. This requires consideration of all the stakeholders that are critical to its success (shareholders, employees, customers, suppliers and communities), as determined by the corporation and its board of directors using their business judgment and with regular engagement with shareholders, who are essential partners in supporting the corporation’s pursuit of its purpose. Fulfilling purpose in such manner is fully consistent with the fiduciary duties of the board of directors and the stewardship obligations of shareholders.

This statement of corporate purpose is broad enough to apply to every business entity, but at the same time supplies clear guideposts for action and engagement. The basic objective of sustainable profitability recognizes that the purpose of for-profit corporations includes creation of value for investors. The requirement of lawful and ethical conduct ensures generally recognized standards of corporate social compliance. Going further, the broader mandate to take into account all corporate stakeholders, including communities, is not limited to local communities, but comprises society and the economy at large and directs boards to exercise their business judgment within the scope of this broader responsibility. The requirement of regular shareholder engagement acknowledges accountability to investors, but also the shared responsibility of shareholders for responsible long-term corporate stewardship.

Fulfilling this purpose will require different approaches for each corporation depending on its industry, history, regulatory environment, governance and other factors. We expect that board committees—focusing on stakeholders, ESG issues and the stewardship obligations of shareholders— will be useful or even necessary for some companies. But for all the differences among companies, there is an important unifying commonality: corporate action, taken against the backdrop of this formulation of corporate purpose, will be fully protected by the business judgment rule, so long as decisions are made by non-conflicted directors acting upon careful consideration and deliberation.

Executed in this way, stakeholder governance will be a better driver of long-term value creation and broad-based prosperity than the shareholder primacy model. Directors and managers have the responsibility of exercising their business judgment in acting for the corporate entity that they represent, balancing its rights and obligations and taking into account both risks and opportunities over the long term, in regular consultation with shareholders. Directors will not be forced to narrow their focus and act as if any one interest trumps all others, with potentially destructive consequences, but will instead have latitude to make decisions that reasonably balance the interests of all constituencies in a manner that will promote the sustainable, long-term business success of the corporation as a whole.

À la prochaine…

Alors que tout le monde évoque le changement de paradigme lié à l’émergence d’un « stakeholderism », le Wall Street Journal lance un pavé dans la mare sous la plume notamment du professeur Bebchuk : rien n’a vraiment changé ! « ‘Stakeholder’ Capitalism Seems Mostly for Show » (Wall Street Journal, 6 août 2020)

Extrait :

Notwithstanding statements to the contrary, corporate leaders are generally still focused on shareholder value. They can be expected to protect other stakeholders only to the extent that doing so would not hurt share value.

That conclusion will be greatly disappointing to some and welcome to others. But all should be clear-eyed about what corporate leaders are focused on and what they intend to deliver.

Pour un commentaire du Board Agenda, voir « Stakeholderism: Study finds evidence in short supply ».

À la prochaine…

Alors que les entreprises se relancent péniblement, un rappel de ces mots du Forum économique mondial d’avril 2020 paraît adéquat (histoire de ne pas oublier et de ne pas faire primer l’économique et le financier sur toute autre considération).

Déclaration « Stakeholder Principles in the COVID Era »

As business leaders, we are experiencing how profoundly the COVID-19 emergency is affecting the world. Our employees face health risks in their daily lives, and challenges in performing their jobs. Our ecosystem of suppliers and customers is under extreme pressure. By doing all we can to coordinate our work, we can ensure that our society and economy get through this crisis and we can mitigate its negative impact on all of our stakeholders.

We accept our responsibility to address these crises. The first priority is to win the war against coronavirus. We need to do that while doing all we can to help our stakeholders now and, at the same time, to avoid a prolonged economic impact in the future. We will continue to embody “stakeholder capitalism” and do all we can to help those who are affected, and help secure our common prosperity.

To this end, we endorse the following Stakeholder Principles in the COVID Era:

− To employees, our principle is to keep you safe: We will continue do everything we can to protect your workplace, and to help you to adapt to the new working conditions

− To our ecosystem of suppliers and customers, our principle is to secure our shared business continuity: We will continue to work to keep supply chains open and integrate you into our business response

− To our end consumers, our principle is to maintain fair prices and commercial terms for essential supplies

− To governments and society, our principle is to offer our full support: We stand ready and will continue to complement public action with our resources, capabilities and know-how

− To our shareholders, our principle remains the long-term viability of the company and its potential to create sustained value

Finally, we also maintain the principle that we must continue our sustainability efforts unabated, to bring our world closer to achieving shared goals, including the Paris climate agreement and the United Nations Sustainable Development Agenda. We will continue to focus on those long-term goals.

The world has gone through other crises. As a global community, we will prevail this time as well. But, to do so, we must all bond together and coordinate our response. As business leaders, we pledge to stand at society’s service, to help preserve and rebuild a viable society and economy, and to do all we can for our stakeholders.

À la prochaine…