Companies add value to society by seeking to be profitable for their shareholders. To do so, they make things people need. In the process, they enrich their workers, business partners, and communities.
By shifting their focus to stakeholders rather than investors, CEOs may be attempting to distance themselves from their fiduciary duties to shareholders—fiduciary duties that are underpinned by moral principles. Former Chief Justice of the Delaware Supreme Court Myron Steele argues that the morality imbued in Delaware corporate law’s fiduciary duties “holds corporate actors to a higher standard, discourages distasteful or unsavory conduct in blind pursuit of individual interests, and reflects the manner in which those same actors might interact in other, similar, but non-business contexts.”[46] No such higher standard of conduct applies to the relationships between stakeholders and corporate officers and directors, so it is not surprising that those relationships are being used to justify certain business decisions.
Shibusawa [Eiichi, who is known as “the father of Japanese capitalism,"] again serves as an example of a better way. He devoted his own time and resources to philanthropy. He was an early supporter of one of Japan’s first institutions dedicated to the care of orphans, the elderly, and the disabled.[47] He helped found the Japanese Red Cross, several of Japan’s leading educational institutions (including at least two institutions of higher education for women), and hospitals.[48] He was known for never turning down a request for a meeting from an entrepreneur or a younger corporate manager and mentored hundreds of younger businessmen.[49] It is wonderful when people earn money and spend it for good causes, but shareholders and corporate executives should earn the money first and only then give it away. True, this is the harder road, as it requires each of us as individuals to give of our own time and resources and to give sacrificially, rather than letting shareholders foot the bill, but none of our great moral teachers ever said the path to virtue was an easy one.
[46] Myron T. Steele, “The Moral Underpinnings of Delaware’s Modern Corporate Fiduciary Duties,” 26 Notre Dame J.L. Ethics & Pub. Pol’y 3 (2012).
[47] See, e.g., Shimada Masakazu, The Entrepreneur Who Built Modern Japan: Shibusawa Eiichi 140-141 (2017).
[48] See, e.g., Mimura Akio, “Shibusawa Eiichi’s principle of “The Analects and the Abacus” will save the Japanese economy,” Japan Foreign Policy Forum (July 11, 2019), available at https://www.japanpolicyforum.jp/economy/pt20190711230502.html (last visited Aug. 26, 2020); Miyamoto, supra note 5, at 150.
[49] See Shibusawa, supra note 8, at loc. 710 (“I make a point of always meeting with anybody who requests a meeting with me. Whoever they are, if I have time, I will meet with them and listen to their requests for help and to their dreams. And if I think what my visitor wants is ethical, I find a way to help, regardless of what kind of person he is.”).
