June 12, 2024
When you ask people what’s wrong with corporations, they’ll usually tell you that all they care about is money. “They don’t care about the environment, employees or the community.” What they won’t be able to tell you is why. If you ask, most will suggest that it is greed. Luckily, this isn’t correct. It would be much more difficult to fix greed, than it will be to fix the real problem.
The problem isn’t the greed of people who run corporations, it’s the law that tells them how they must behave.
The corporate law all over the world says company directors must always act in their company’s best interests. This doesn’t mean they must maximize profits, as some claim. It means directors must act to preserve and enhance the company’s value.
There’s enough room in that for companies to sometimes protect the public interest when the cost to the company is small or the public relations value is high. However, when there’s substantial money at stake, they have less flexibility. Then, they must act in the best interests of the company, even when it means the public interest will continue to be severely harmed.
This law should be much easier to change than most laws governing corporate behaviour. It’s time to take advantage of that.
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