By: Maureen Milford
November 20, 2019
From holding CEOs accountable to mandating women on boards, some policymakers want to mandate that corporations do good.
For the first time since the Great Depression, companies are vulnerable to a range of proposed legislation that attempts to rein in what some believe are freewheeling behaviors allowed under the shareholder-comes-first model.
The growing number of initiatives that fall under the ESG umbrella of environmental, social and corporate governance issues shows a willingness among some policymakers to force companies and their directors to consider society’s larger goals. What’s more, there seems to be an increased appetite for punishing companies that fail to weigh the impact of their decisions on more than just maximizing shareholder value.
“People are less and less willing to give the corporate sector a pass,” says Robert Hockett, a professor at Cornell Law School who helped develop two ESG-related pieces of legislation introduced in the last session of Congress, including the Accountable Capitalism Act (ACA) and Stop WALMART Act.
Before long, boards could find themselves navigating an even more complex terrain of state, federal and international ESG laws and rules that will require directors to examine how their behaviors affect a wide-ranging group of constituencies or so-called stakeholders, such as employees, customers, suppliers and communities.