What Is Wrong with Corporate Law? The Purpose of Law and the Law of Purpose

Abstract

Corporate purpose should be at the heart of corporate law. This article addresses objections that corporate law already permits firms to determine their purposes, and companies would not in any event do more than at present in formulating their purposes. It argues, first, that critics of the law of corporate purpose have failed to recognize that purpose can address divergences of private interests of corporations from public interests of society and the natural world. Second, the law provides a means of commitment to delivery of long-term prosperity. At present, the law fails to protect companies seeking to create long-term prosperity through committing to other parties’ interests. It can and should ensure alignment of corporations’ incentives with individual, societal, and planetary interests and enable firms to commit credibly to resolution of their problems.