The revival of the corporate purpose debate has once again brought to the forefront the question of whose interests companies should serve. Purposes that focus on shareholder value are increasingly scrutinised in a world grappling with challenges like climate change and the COVID-19 pandemic. While historically company law played a role in shaping corporate purpose by requiring companies to assume certain social responsibilities, this paper argues that it is unrealistic to expect modern company law to shift away from a shareholder orientation. Using English company law as an example, including recent cases such as BTI 2014 LLC v Sequana and ClientEarth v Shell Plc, this paper critically examines directors’ shareholder-oriented fiduciary duties, shareholders’ ultimate control, and other forces that reinforce such a focus. It finds that company law in its current form is not well equipped to address negative externalities or social harms. As a result, proposals like mandating a purpose clause or revising fiduciary duties are unlikely to be effective. The paper concludes that viable tools lie outside the traditional boundary of company law: regulatory regimes in areas such as consumer protection, employment, anti-discrimination, and environmental protection can more effectively impose obligations that ensure directors consider broader stakeholder interests in their decision-making. By shifting the focus towards these external legal frameworks, the paper attempts to guide scholars, commentators, and policymakers towards more effective strategies for promoting corporate responsibility in an era full of pressing global challenges.
Min Yan (Sun,) studied this question.