Corporate and Securities Law Impact on Social Responsibility and Corporate Purpose

Abstract

The role of social responsibility in corporate governance has been the subject of debate for nearly ninety years. That debate has been reframed over the decades. Several recent events have resulted in increased focus on corporate social responsibility, especially with respect to publicly held corporations. This Article explores the law’s two different paths for impacting social responsibility. The current iteration of the corporate responsibility movement has implications for both state law chartering of corporations and federal securities regulation. This Article analyzes the ways in which stated purpose clauses in a corporation’s articles of incorporation may be useful in addressing social responsibility and other corporate mission issues. This includes a brief discussion of benefit corporation statutes, followed by a discussion of how better use of stated purpose clauses may be a meaningful proxy for opting into benefit corporation statutes. This Article also traces developments in the securities laws’ approach to corporate social responsibility, including recommending the adoption of a safe harbor rule to encourage corporations to make disclosures relating to social responsibility.