When I advocate for a change in the duty of directors, I’m talking about changing corporations conceptually. I'm not talking about tightening business a little bit more to give regulators greater control or victims more rights to seek redress. That sort of business regulation gets noticed by the regulator, a few businesspeople whose job it is to implement the new law and no one else.
The purpose of the Code is to change the idea of what business, the corporation and the economy are all about. Today, business is simply about delivering returns for investors. Everyone outside the corporation expects that when companies do serious harm to the environment and public interest, it's their right to continue to do so until a law is passed to stop it. We further expect that the company will do whatever it can to keep such a law from being passed.
We expect this because in our lifetimes it’s always been this way and is what current law provides. The Code will change the law for the express purpose of changing that expectation and the role corporations play in our world. Big companies should be more balanced and more respectful of the environment and humanity. Going forward, the expectation should be that these companies will stop (voluntarily) when they find themselves doing significant harm to the public interest. That’s part of them being a good citizen.
The Code states this in as few words as possible and provides the backbone in the law to make it a reality.
“The purpose of the corporation is to make money for investors, but not at the expense of:
· the environment,
· human rights,
· public health and safety,
· dignity of employees or
· welfare of the communities in which it operates.”
It’s a simple concept which everyone can understand. Making it the law should change expectations and could have a huge effect on how we view corporations and regulate business in the future. Even if it doesn't, what's the downside of changing the purpose of the corporation to make it more respectful of the environment and other elements of the public interest?