How Should Corporations be Managed

Which of the three duties of corporate directors set forth below would you prefer? Please advise your choice and why. Ask your friends too.

1.  Directors must act in the best interests of their company and its shareholders.  (Existing law)

2.  (1) A director must act in the way the director considers, in

good faith, would be most likely to advance the purpose of the

company, and in doing so must have regard (amongst other matters)

to the following considerations—

(a) the likely consequences of any decision in the long term,

(b) the interests of the company's employees,

(c) the need to foster the company's business relationships with

suppliers, customers and others,

(d) the impact of the company's operations on the community and

the environment,

(e) the desirability of the company maintaining a well-deserved

reputation for trustworthiness and high standards of business

conduct, and

(f) the need to act fairly as between members of the company.

(2) The purpose of a company shall be to benefit its members as a

whole, whilst operating in a manner that also—

(a) benefits wider society and the environment in a manner

commensurate with the size of the company and the nature of its

operations; and

(b) reduces harms the company creates or costs it imposes on wider

society or the environment, with the goal of eliminating any such harm or costs.  (Better Business Act)

3.  A director of a company must act in the best interests of its company and shareholders but not at the expense of severe damage to

(a) The environment,

(b) Human rights,

(c) The public health and safety,

(d) The dignity of employees, or

(e) The wellbeing of the communities in which the company operates. (Code for Corporate Citizenship)

Clue: Existing law results in companies making money in ways that severely harm the environment and other elements of the public interest.  

The Better Business Act would require directors to consider the consequences of their actions on other stakeholders and recognise the company's purpose of benefitting shareholders, wider society and the environment while reducing (with the goal of eliminating) any harm or costs to society or the environment.

The Code for Corporate Citizenship would make directors immediately responsible for stopping any corporate behaviour which causes severe harm to the environment and four other elements of the public interest and would put all companies on notice that a similar fate will befall them if they over invest in businesses which are later found to be causing any such severe harm.