During the past two months, the COVID-19 pandemic has prompted discussion regarding the proper role of the American corporation. Among these discussions is a renewed focus on environmental, social, and governance (“ESG”) issues. While many companies have proclaimed their commitment to ESG issues for years, the pandemic’s pervasive effect on American workers, customers, and society has heightened the existing pressure on companies to focus on profit maximization and the creation of tangible shareholder value.
Leo Strine, former Chief Justice of the Delaware Supreme Court, encapsulated this public reckoning in a recent article, in which he opined on the manner in which corporations should respond to the pandemic:
[T]he corporation’s obligations to its workers, its regular contractors, service providers, and lenders, and others with a legal and ethical claim to being paid comes above its duty to stockholders. Corporate leaders have the discretion to use their business judgment to best enable the corporation to weather this unprecedented storm, to honour its duties to those who have made the deepest commitment to the company’s success (that is, its employees), and to secure the solvency and long-term health of the business.
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