Moving Beyond Shareholder Primacy: Can Mammoth Corporations Like ExxonMobil Benefit Everyone?
The New York Times recently took issue with Rex Tillerson, the President-elect’s nominee for Secretary of State, and the current CEO of ExxonMobil. Why? “Tillerson Put Company’s Needs Over U.S. Interests,” accused the front page headline. The article details how the company puts shareholders’ interests before the interests of the United States and of impoverished citizens of countries around the world.
In response, a company spokesman insisted that all laws were followed, and that “‘[a]bsent a law prohibiting something, we evaluate it on a business case basis.’” As one oil business journalist puts it in the article: “‘They are really all about business and doing what is best for shareholders.’” Thus, as long as a decision improves return to shareholders, its effect on citizens, workers, communities or the environment just doesn’t rank.
Unfortunately, this idea — evaluate the “business” case, without regard to collateral damage, permeates the global capital system. Corporations are fueled by financial capital, which ultimately comes from our bank accounts, pension plans, insurance premiums and mutual funds, and from foundations and endowments created for public benefit — in other words, our money. And yet when that capital is invested in companies that ignore societal and environmental costs, we all suffer: Corporations use our savings to drive climate change, increase political instability, and risk our future in myriad ways.
The good news is that structures like “benefit corporations” can help us repair our broken system of capital allocation — but the clock is ticking.
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Frederick H. Alexander, “Moving Beyond Shareholder Primacy: Can Mammoth Corporations Like ExxonMobil Benefit Everyone?” B Magazine (December 15, 2016).