Valeur actionnariale vs. sociétale | Page 5

Les entreprises et les banques canadiennes semblent avoir fait le choix de la RSE et des parties prenantes comme l’illustre cet article : « Canadian companies can care about more than profit, and could pay a price if they don’t «  (Financial Post, 3 juin 2020).

Extrait :

It is not the first time a leader with a fiduciary responsibility waded into the public discourse. In January, Michael McCain, chief executive of Maple Leaf Foods Inc., used Twitter to criticize the White House for creating geopolitical conditions that led to Iran’s military destroying a Ukrainian airliner carrying more than 170 people, including 55 Canadian citizens and 30 permanent residents.  

(…) Corporate stances on environmental, social and political issues are becoming more common. And in Canada, a change to corporate law last year freed executives of some companies to expand their mandates beyond simply maximizing shareholder returns without fear of legal reprisal.

(…) “Companies and investors are beginning to recognize that what happens out there in the real world is arguably even more important than what happens on their spreadsheets and terminals,” said Kevin Thomas, chief executive of the Shareholder Association for Research and Education, a not-for-profit group focused on responsible investing. 

The responses by the heads of some of Canada’s biggest companies to the protests in the United States, as well as their various attempts to assist customers during the coronavirus pandemic, come as companies are also embracing more “stakeholder” capitalism, wherein the raison d’être for firms is more than just returning cash to shareholders. 

(…) Stakeholder capitalism was the theme of this year’s World Economic Forum’s gathering in Davos, Switzerland, where one of Masrani’s peers, Royal Bank of Canada chief executive Dave McKay, was in attendance. 

“As trust in governments wanes, and the complexity of society’s problems grows, companies are charting their own course on environment, social and governance issues, to maintain public confidence in business and ensure the prosperity of communities that business serves,” McKay wrote in January. 

On Tuesday, McKay published a post on LinkedIn stating he was “personally outraged at the senseless and tragic deaths in the U.S., which are clearly symptomatic of ongoing racial discrimination and injustice, and I know we are not immune to it in Canada.”

A year ago, Parliament passed legislation that amended the Canada Business Corporations Act (CBCA), which lays out the legal and regulatory framework for thousands of federally incorporated firms, to spell out in greater detail how directors and company officers could meet their legal responsibility to “act honestly and in good faith with a view to the best interests of the corporation.”

The updated law states that directors and officers may consider shareholders, as well as employees, retirees, creditors, consumers and governments when setting corporate strategy. The law also now states that both the environment and “the long-term interests of the corporation” can be taken into consideration.

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Encore un papier sur le fameux « purpose » du droit des sociétés par actions. C’est le professeur Edward Rock qui s’y attaque dans un article intitulé « For Whom is the Corporation Managed in 2020?: The Debate over Corporate Purpose » (European Corporate Governance Institute – Law Working Paper No. 515/2020, 1er mai 2020).

Résumé :

A high profile public debate is taking place over one of the oldest questions in corporate law, namely, “For whom is the corporation managed?” In addition to legal academics and lawyers, high profile business leaders and business school professors have entered the fray and politicians have offered legislative “fixes” for the “problem of shareholder primacy.” In this article, I take this debate to be an interesting development in corporate governance and try to understand and explain what is going on. I argue that, analytically and conceptually, there are four separate questions being asked. First, what is the best theory of the legal form we call “the corporation”? Second, how should academic finance understand the properties of the legal form when building models or engaging in empirical research? Third, what are good management strategies for building valuable firms? And, finally, what are the social roles and obligations of large publicly traded firms? I argue that populist pressures that emerged from the financial crisis, combined with political dysfunction, have led to the confusion of these different questions, with regrettable results.

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Le cabinet d’avocat Stikeman Elliott revient dans un billet court sur la mission du CA en contexte de pandémie : « COVID and Corporate Governance: A Broader Mission for Corporate Boards » (24 avril 2020).

Extrait :

The discussion focuses on the key challenges facing Canada’s corporate leaders as the reopening phase approaches:

• Focusing on issues that matter;
• Immediate crisis management and board readiness;
• Re-thinking strategy and risk management;
• Re-thinking incentive frameworks; and
• Re-thinking corporate purpose.

À la prochaine…

Le 30 avril 2020, Philip Gavin s’est interrogé sur l’intérêt de l’article 172 du Company Act pour les administrateurs et dirigeants dans le contexte de la COVID-19 : « Directors’ Duty under UK Law to Promote the Success of the Company during the COVID-19 Pandemic » (Oxford Business Law Blog).

Extrait :

A nuance to director’s duties in the United Kingdom is the expansive statutory delineation of s 172, which endows numerous considerations for directors when acting to promote the success of the company for the benefit of members. Given the unique circumstances of the present-day commercial sphere and the more humanitarian demands being put to businesses, having a statutory foundation upon which to base non-traditional business strategies may assist effective decision-making and financial reporting.

The initial three considerations enshrined within s 172 are (a) the likely long term consequences of any decision, (b) the interests of employees and (c) the need to foster business relationships with suppliers, customers and others. These factors are of particular relevance for firms who sought justification for voluntary shutdown of businesses prior to the wider governmental shutdown.

(…)

Where production changes become quasi-humanitarian in tone and companies internalise cost in the interim, directors may seek justification through s 172(1)(d) and (e), these being the impact on the community and the desirability of maintaining high business standards respectively.  Accordingly, directors can seek to frame these quasi-humanitarian efforts in long-term reputational terms, thereby engendering prospective communitarian goodwill.

Furthermore, as political pressure mounts, boards may evaluate reputational factors not simply in terms of market reputation, but also in terms of Governmental co-operation. This is particularly so where companies face increased intervention by public authorities through the Civil Contingencies Act. Comparatively, in a recent memorandum the Trump administration has attempted to exert control over the distribution of ventilators by the multinational conglomerate 3M. Cautious of such intervention occurring within their own enterprises, companies may shift business operations to such an extent to signal their compliance and co-operation with public authorities, thereby disincentivising the wholesale overrule of board discretion. 

Within jurisdictions with vaguer duties to act bona fide in the best interests of the company (Delaware, Australia, Ireland), directors may still engage in such quasi-humanitarian efforts. Nevertheless, utilising s 172 to steer directorial judgment may assist effective decision-making, and furthermore guide financial reporting, which mandates s 172 director’s statements.  Given that the tenor of 2020 reports will be likely dominated by COVID-19, UK directors will benefit from the homogenising structure of s 172 when making such disclosures in the coming months.

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UCLA School of Law vient de publier un rapport d’une dizainede pages sur la gestion du capital humain et son intégration dans la gouvernance des entreprises : « Corporate Governance : The growing Importance of Human Capital Management » (avril 2020).

Extrait :

1. Over the last several years, investors and proxy advisory firms have increasingly focused their attention on environmental, sustainability and governance (ESG) and human capital management (HCM) issues. While there is no one definition of HCM, the term is widely used to cover a very broad range of workforce matters that are of concern to investors and the public as they focus on building long-term value and reducing business and reputational risks. These concerns have resulted in calls for enhanced company disclosures about their HCM practices and processes.

2. Under Delaware and federal law, directors have no duties that are specifically focused on HCM. However, under Delaware law and that of many other states, directors have duties of care, loyalty and oversight that can under certain circumstances apply to HCM matters and can result in director liability.

3. While federal securities laws and rules contain several corporate disclosure requirements that apply to employees and touch on HCM issues, current laws and rules are not as robust or focused as many investors would like and have proposed. In response to rulemaking and other investor requests, the U.S. Securities and Exchange Commission has proposed amendments to its disclosure rules that would expressly require companies to describe their human capital resources to the extent that they are material to an understanding of a company’s business as a whole.

4. Some public companies have already articulated board responsibilities for oversight of HCM matters; some have renamed and expanded the responsibilities of their compensation committees to reflect their expanded focus; and some have disclosed their HCM polices and efforts in their securities law filings and other publications.

5. Separate and apart from the legal requirements that apply to corporate board duties and corporate disclosure requirements, there are important business, governance and reputational reasons for boards and companies to care about and address HCM matters. 6. While there is no one-size-fits-all approach to board oversight of HCM matters, areas for possible board attention are (i) diversity and inclusion, (ii) employee satisfaction and engagement, (iii) succession and talent management, (iv) attrition and retention, and (v) ethics, workforce culture and risk.

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Article sympathique à lire de Suren Gomtsian intitulé : « When Businesses Can Do Good: Lessons from the Coronavirus Crisis for Promoting Responsible Business Practices » (Oxford Business Law Blog).

Extrait :

Universal threats can unite opposing camps in a common effort. The new coronavirus has hit almost every country and has created a shared understanding that every effort to contribute, however small it may be, is needed to overcome the crisis. Many businesses, typically criticised for giving priority to profits and to the interests of shareholders and managers, are part of the common response to the virus.

(…)

It is very unlikely that the virus has suddenly changed the corporate world. Clearly, the motivations of businesses for doing good may differ. While some have a genuine sense about their role in fighting the virus and helping those in need, many others view the crisis as a well-calculated opportunity to amend their battered reputations as partners and employers and gain advantage over competitors once the pandemic is over. But regardless of the motivations, the reaction of the corporate world to the pandemic offers three lessons for the promotion of responsible business practices in normal times.

First, in the absence of legislative action, change in corporate behaviour happens when there is broad consensus in society that collective action in response to a threat is an urgent priority. It is not poor ethics or morals that hold businesses back from working together with other parts of society, but disagreements about the scale and urgency of the problem. The collective response to coronavirus is the result of a broadly shared agreement on what companies are expected to do in the crisis that has emerged in almost every affected nation. Remarkably, companies are behaving differently even in the absence of legal reforms – laws on corporate purpose and directors’ duties are the same today as they were at the outset of the crisis.

Company founders and managers are a diverse group, and so are their preferences. Some may have serious concerns about global challenges facing humanity, such as inequality—whether of income, gender, race, or opportunities—or climate risks. But even these businesses may struggle in behaving responsibly because of concerns about becoming uncompetitive against less enlightened businesses. The classic collective action problem forces would-be responsible businesses to make the rational decision of ignoring inequality and environmental problems.

Where market failures like this are strong, the usual response is government intervention, for example, through the adoption of stricter employment protections or environmental standards. The reaction to the virus shows the power of a decentralized solution to the problem through collective social backlash. By increasing the costs of ignorant behaviour, broad society consensus promotes responsible business practices across markets and nations.

Second, businesses need clear guidelines as to what practical steps they are expected to take to meet the common goal. Governments have been clear about their expectations from businesses during the COVID-19 crisis by recommendations to preserve employment, cut dividends and share buybacks, and lower rents by property owners. Similarly, society in general has been sending clear signals about the expected behaviour by approving some actions taken by companies and showing discontent over undesired conduct in the form of widespread backlash.

For example, when Johnson & Johnson, a medical company, announced plans to invest US $1bn in developing a COVID-19 vaccine, the company’s shares jumped despite the not-for-profit nature of the project. By contrast, the decision by Sports Direct to keep shops open as essential or the decision by Adidas to skip rental payments on its stores led to public outcry and calls to boycott products in tabloid and social media. Similarly, the reluctance by the UK’s largest banks and German carmakers to cut dividends raised many eyebrows. Not only were some of these companies forced to apologize and reverse course, but their reputations were damaged too. Widely shared public reaction can thus send a clear message to all other businesses what to do and how not to behave.

Third, developing consensus over global challenges requires international cooperation. The exceptional scale of the current crisis coupled with the fear that governments responding to the crisis differently to others will face fierce questions explains why, even in the absence of coordination, all nations individually have acted similarly. But countries are likely to be affected differently, at least in the short run, on many other important matters. For example, the degree of underlying inequality varies across countries and some countries experience more acute climate-related risks, like forest fires or rising sea levels, than other nations. This means that atomistic development of consensus through peer pressure, unlike in the case of COVID-19, is highly unlikely. Local action, meanwhile, cannot offer meaningful solutions because markets are still global and responsible governments and businesses will not be able to compete if others do not act similarly.

To sum up, if we want businesses to act responsibly, we need to deliver a clear message by developing consensus over global challenges and communicating it clearly to businesses as one shared global voice. We also need to set out what practical steps businesses need to take to achieve the common goal – whether through government nudges or endorsements in social and news media. Where threats affect nations differently, this can be achieved only through cooperation on a global scale. Given the rise of national sovereign interests and national governments, we are facing a huge task in developing broad consensus on matters that are important. The arrival of responsible capitalism may thus take time. For now, until this consensus is formed, blame us and our elected governments, not businesses, for the failures of capitalism.

À la prochaine…