The CHARACTER of the Corporation: Is your company operating in a socially purposeful way?

AuthorTahmincioglu, Eve

There is a growing movement to push corporations to take on a bigger role in addressing societal problems, from climate change to income inequality.

That's left many directors wondering what type of role and how big a role they should--or even can--play in today's corporate environment largely focused on short-term stockholder value above all else.

Delaware Supreme Court Chief Justice Leo Strine tells Directors & Boards that it is not "sustainable to have societies where large corporations do not have to align their business practices with the interests of living, breathing human beings who deserve a safe environment, economic security and consumer protection."

But how do boards take up the challenge?

To address one of the most pressing challenges of our time, Directors & Boards is dedicating this year's coverage to something we're calling "The Character of the Corporation," which is the very essence of a company's approach to making money and how that approach impacts all stakeholders--employees, communities, etc.--not just stockholders. The key question: Is your organization operating in a socially purposeful way? We will provide insights on the purpose-vs.-profit concept and on environmental, social and governance issues (ESG) from top corporate directors, corporate governance experts, legal scholars and government officials.

This kickoff issue includes purpose perspectives from PepsiCo's former chairman; directors at Costco, Hewlett-Packard, Best Buy and Bank of America; officials at Vanguard, State Street, CalPERS, Institutional Shareholders Services and the U.S. Chamber of Commerce; and a host of other corporate-governance influencers looking to bolster the greater good.

For many directors, it's unclear how far down the purpose path they can go while still meeting their legal obligations to company stockholders.

Some of the key questions include: Should boards consider ESG issues, even if they could potentially impact the bottom line? Can directors be held in breach of their fiduciary duties if they consider other stakeholders that could be interpreted as benefiting more than the shareholder? Is shareholder primacy still king, or is the...

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