SETTING THE STAGE
Specific Investment and Corporate Law: Explaining anomalies in corporate law 
Margaret M. Blair and Lynn A. Stout

After decades of intellectual hegemony in legal scholarship, conventional shareholder primacy seems poised for decline. The old principal-agent model is vulnerable because it fails to explain important anomalies. For example: contrary to the notion that corporate directors have an enforceable duty to maximize shareholder value, liability is only very rarely imposed on directors for anything other than breach of the duty of loyalty (using their positions to line their own pockets). A new paradigm is appearing in corporate law scholarship, emphasizing the problem of protecting “specific” investments—specialized resources of highest value when used in a particular project. Under this new team production model, directors are not agents of shareholders but “mediating hierarchs” who protect specific investments by many stakeholders and distribute returns from that investment.

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A New Era for Corporate Law: Using corporate governance law to benefit all stakeholders
Kent Greenfield

Law is essential to make the corporation successful. Yet under present law, a corporation meets its obligations if it creates wealth only for its shareholders. This is a narrow view of corporate purpose. Responsible corporate leadership is about creating value not only for shareholders but for employees, customers, and communities as well.  In this view, management could be required to owe fiduciary duties to the firm as a whole, and corporate boards could be reconstituted to include representatives of various stakeholders. Approaches like these – using corporate law reform to address social issues – could be more efficient than existing regulatory options.

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More Than Corporations: A new economy for a new era
David Korten

The day of reckoning for our reckless human ways has arrived. Reversing the present downward spiral of social and environmental disintegration will require a deep transformation of our economy. Curbing the abuse of corporate power is central, but is only one piece of a larger agenda—a work best understood as a large historical movement from an ethos of empire to one of community. For 5,000 years, we humans have organized relationships by a dominator hierarchy, denying the humanity of the many to privilege the few. Change begins with a new Earth Community prosperity story that looks to life, rather than money, as the true measure of wealth. Our challenge is to transform our economic system from the bottom up by bringing forth living economies that root power in community, balance individual and community interests, and support a cooperative sharing of resources.

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INTERNAL DRIVERS

Internal Transformation of Corporations: The road to conscious capitalism
Michael Thomas and Bill Veltrop

The root cause of our widespread environmental, economic, and social issues is organizational design. Few of our complex organizations have been designed to be learning organizations or conscious, empathetic, self-evolving social systems. This design deficiency is at the heart of our global problems. Corporate metamorphosis to conscious capitalism – where corporations function for the world – needs to be an inside job. It will be initiated by corporate leaders because it is a superior business model and better serves the needs of all stakeholders. It can be catalyzed by well-designed external initiatives, and it can be confounded by poorly designed external initiatives. The coming just-in-time evolutionary shift will be driven by leaders who see that they can strengthen their organization’s financial sustainability by addressing rather than avoiding the major social, economic, and environmental challenges of the 21st century.

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EXTERNAL DRIVERS
Long-term Investing: A proposal for how to define and implement long-term investing
Steven Lydenberg

Many voices have extolled the virtues of long-term investing and condemned short-termism. But little real change is taking place. Financial professionals are forced to act in the short term because of the Short-Term Measurement Dilemma. When the market is valued according to a short-term measurement—that is, stock prices—and when performance is measured against these prices, long-term investing is impossible. This paper proposes a simple definition of long-term investing: Long-term investors speculate on the value of corporations to society and the environment, while seeking to enhance that value at the company and societal level. The wealth corporations create is more than stock price. Thus investors can function not only as price takers, but as value makers. To do so, they must engage management on social and environmental issues and set clear standards—beyond relative price—for allocating investments.

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The Next Generation of Stock Exchanges: Creating local stock exchanges as hubs to support local living economies
John Katovich

Local, small- to medium-sized companies constitute the lion’s share of the U.S. economy yet lack opportunities to be traded on national stock exchanges. These companies are directly connected to our well-being since their assets are by definition locally sited and owned. They hire neighbors, and their success benefits residents. Capital access for such enterprises must be established. We must explore what a new kind of local exchange might look like, which could create an easy way for community residents to invest in local businesses. A local exchange could include small companies in various stages of their lifecycle—some in a moderate growth phase. And business owners could sell minority stakes to local residents (primarily non-accredited investors) who are devoted customers, who share their vision, or who want to support local businesses. A local exchange might also develop responsible social reporting standards, and encourage listed companies to amend articles of incorporation to take stakeholder interests into account.

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Revisiting Corporate Charters: Reviving chartering as an instrument for corporate accountability and public policy
Charles Cray

Though little used since the 19th century, corporate chartering has the potential to be one of the best ways to hold corporations accountable to the public interest. Three approaches are possible, focused on single companies, all companies, or specific industries. Examples of federal chartering of individual companies are Fannie Mae and Amtrak – the mortgage giant and passenger rail companies – which suggest a strategy that could be taken further. More broadly, a uniform higher standard of chartering might be established to reinforce the public purpose of every corporation, or to provide a framework of accountability that current regulatory systems can’t provide. This might include a process of “sunset and review,” with public input. More immediately, policy-makers might first use chartering to address problems in specific industries where the case for public intervention is obvious, such as public health, natural security, energy, or transportation.

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Transforming Corporate Reporting: Envisioning a new reporting framework that serves multiple stakeholders
Alan Willis

When we understand the anatomy and physiology of the current corporate reporting regime, it becomes readily apparent that this model is inadequate for disclosures to a broader group of stakeholders beyond shareholders. There is an urgent need for transformation of this system. Any new reporting model should satisfactorily address issues raised by Corporation 20/20’s Principles – that corporations have a duty to serve the public good, to consider the interests of many stakeholders, to distribute wealth equitably, to operate sustainably, and to respect human rights. This paper imagines what a new reporting regime might look like and how steps could be taken in that direction.

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PATHWAYS
The Emergence of New Corporate Forms: The need for alternative corporate designs integrating financial and social missions
Susan Mac Cormac, with assistance from Jonathan Glass and Julie Cook

The inadequacy of the rigid line dividing for-profit vs. nonprofit has been recognized by two different movements gaining momentum. For-profits are pursuing social mission while nonprofits are taking on profitable subsidiaries. These movements raise questions about the adequacy of existing corporate forms, which in key ways seem to prevent organizations from successfully blending profit making with social mission. This analysis examines and critiques various emerging solutions and novel proposals. It concludes that there is a clear case to be made for the creation of new corporate forms, yet the complete answer to the puzzle is not yet fully in hand.

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An Action Agenda for Corporate Redesign: Creating a roadmap for stakeholder action
Deborah Doane

Corporate social responsibility initiatives lull us into thinking that somehow our disparate actions add up to a cohesive whole. In fact, no current movement has the transformative power engendered by civil rights, anti-apartheid, or women’s suffrage movements. How do we move from Corporation 20/20’s articulation of a vision to achieving measurable change? This will require action on many fronts. Large companies can support stakeholder-based governance, while smaller companies can demonstrate alternative corporate designs. Investors should tackle short-termism, while civil society organizations campaign for policy reform. The role of government may be to explore charter reform, while media creates new reporting tools such as indices and scorecards that redefine success. This paper sketches a possible action agenda to build a cohesive social movement.

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