August 31, 2022 | The George Washington University Business & Finance Law Review

Loosening Shareholder Primacy’s Grip on Environmental, Social, Governance (“ESG”) Factors: Benefit Corporations Offer Increased Latitude in Decision-Making for ESG Motivated Directors

1 min

In April 2021, Matthew Quandt published “Loosening Shareholder Primacy’s Grip on Environmental, Social, Governance (“ESG”) Factors: Benefit Corporations Offer Increased Latitude in Decision-Making for ESG Motivated Directors” in The George Washington University Business & Finance Law Review. The following is an excerpt:

The longstanding view that corporations exist for the sole purpose of delivering profits to their shareholders has come under increased scrutiny in recent years. Critics of shareholder primacy have elevated considerations of environmental, social, and governance factors (ESG), and lauded companies that engage in strong corporate social responsibility initiatives. Legislators have responded to this recent shift of opinion by creating the “public benefit corporation” (PBC) entity form in both Delaware and 34 other states. This “hybrid” organizational form permits directors to consider multiple constituencies in their decision-making and pursue two corporate purposes simultaneously: the traditional pecuniary motive of returning profit to shareholders, as well as additional “public benefits” of their specification, which may be nonpecuniary.

Click here to access the article.