Monday, October 25, 2021

Heminway on Murray on Reforming the Benefit Corporation

Last week, I posted about the first of my two published commentaries from the 2020 Business Law Prof Blog Symposium, Connecting the Threads IV.  That earlier post related to my comments on an article written by BLPB co-blogger Stefan Padfield.  The subject?  Public company shareholder proposals--specifically, viewpoint diversity shareholder proposals.

This week, I am posting on the second commentary, History, Hope, and Healthy Skepticism, 22 TRANSACTIONS: TENN. J. BUS. L. 223 (2021).  This commentary offers my observations on co-blogger J. Haskell Murray’s, The History and Hope of Social Enterprise Forms, 22 TRANSACTIONS: TENN. J. BUS. L. 207 (2021).  The main body of the abstract follows.

In this comment, I play the role of the two-year-old in the room. Two-year-old children are well known to ask “why,” and that is what I do here. Specifically, this comment asks “why” in two aspects. First, I ask why we do (or should) care about making modifications to existing social enterprise practices and laws, the subject of Professor Murray’s essay. Second, assuming we do (or should) care, I ask why the changes Professor Murray suggests make sense. My commentary is largely restricted to the benefit corporation form because corporate forms loom large in the debates relevant to Professor Murray’s essay and because the benefit corporation is acknowledged to be the most widely adopted corporate form as among the social enterprise forms of entity.

And so, Haskell and I are "at it again" over whether the benefit corporation is worth reforming/saving.  More precisely, I am (again) picking a bit of an academic fight with Haskell.  His good nature and patience in response to my continued questions and push-backs have been and are deeply appreciated.

Do/should we care about modifying benefit corporation practices and laws and, if so, do Professor Murray's proposed reforms make sense?  [SPOILER ALERT!]  My bottom line:

I am satisfied—even if not wholly persuaded—that there is a reason to care. Benefit corporations may alter mindsets in a positive way, even if they do not positively or meaningfully alter applicable legal principles. And . . . I am convinced that Professor Murray generally has the right idea in calling for more accountability to a broader base of stakeholders—beyond just shareholders.

So, in the end, I was ready to call a limited truce--or really more of a detente. 

But I do maintain, as Haskell knows, a healthy doubt that the benefit corporation form has any broad-based value (making it hard to agree that amending the standard statutory framework or related practices has any merit).  And it looks like I have a new convert to this cause.  In his recent, provocative thought piece, Capitalism, heal thyself, Alan Palmiter avers as follows:

[W]e don’t really need benefit corporations, those corporations that have a hybrid profit and social/environmental purpose. All the companies that are doing big ESG -- world-changing ESG -- are your garden-variety for-profit (for-shareholder profit) companies. Maybe there are some benefit corporations, like my friend Patagonia, that like the label. But Patagonia didn’t have to be a benefit corporation to do what it’s doing.

That said, there’s a problem with fake benefit corporations, the ones pretending to do ESG. . . .

Alan, as you know, you are beating my drum--a drum I earlier have beaten here, here, and here, among other places, in various ways.  We shall see where it all goes.  But I remain a believer in the ability of the traditional for-profit corporation's ability tio engage in effective, efficient social enterprise and (more broadly) ESG initiatives.

Conferences, Haskell Murray, Joan Heminway, Social Enterprise | Permalink