Morrissey: The Riddle of Shareholder Rights and Corporate Social Responsibility


Shareholders own the entrepreneurial interests in corporations. As such, the law has historically held that they must be run primarily to generate profit for those investors. Progressives and some enlightened business leaders however have long claimed that this “shareholder primacy” rule is inadequate and urged that the larger needs of the community must also be a concern of business decision-makers. This corporate social responsibility movement (CSR) has gained legal traction during the last several decades with legislative initiatives like constituency statutes and the benefit corporation. In recent years reformers have advocated it even more forcefully as a solution to grave and growing public evils such as income inequality and environmental degradation.

Shareholders and their lawyers however continue to play indispensable roles in our economic system by policing corporate corruption and holding executives accountable to provide needed returns to their investors. The drive for corporate social responsibility therefore should not undercut shareholder rights but promote ever more creative ways that businesses can serve the triple bottom line of profits, people, and the planet.


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