By Chris Halburd, B Lab Europe Advisory Board Member and Solicitor at Skinner & Associates
The advertising for the new film “Deepwater Horizon” got me thinking, not of the event itself but rather of the ideology which is so deeply connected with it. For that I need to go back to 2012 when I was living in Brussels and studying the way that multinational corporations are treated in the international legal system. I read a book by an American Law Professor, Lynn Stout, entitled “The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public”.
Professor Stout starts her excellent and highly readable book by noting that the tragic events in the Gulf of Mexico, which flowed from the Deepwater Horizon disaster, not only resulted in loss of life and significant ecological damage but also harmed the shareholders of the company involved. The book goes on to trace the link between the idea that the modern listed corporation exists to maximise value for its shareholders and the far reaching negative impacts that this has on the world and also on shareholders themselves, who may actually be worse off financially as a result.
Late in 2012 I was lucky enough to be working with a law firm, Frank Bold, who decided to do something about addressing the problem by creating a space to explore a purpose for the corporation beyond mere profit. We soon discovered that Professor Stout was not alone. Senior academics across the globe and across many disciplines were also agitating for change. One group, lead by Professor Beate Sjafjell from Oslo, had spent several years researching company law across 26 countries and had found that the biggest barrier to companies contributing to environmental sustainability was the shareholder value ideology.
In the end though, it may not be from academia but from within business itself that the necessary change will come. More than half the States in America now have laws that enable a new type of for profit company, the benefit corporation, which has the dual purpose of making money but also of having a positive impact on society and the environment. In a way they embody the notion of the triple bottom line of people, planet and profit.
We do not yet have laws in Australia to allow benefit corporations but we could. Something to ponder perhaps as you watch the movie.