The voices calling for corporate reform are getting louder. "Corporate
social responsibility is an oxymoron", according to a recent book and
documentary film "the Corporation" by law professor Joel Bakan. He says
corporations are like amoral "psychopaths" - manipulative, incapable of
being empathic or remorseful, and, while causing tremendous damage to the
environment and other elements of the public interest, they refuse to take
responsibility for their behavior. Harsh words, but they resonate with those
uttered by critics of corporate power throughout history.
Corporations are powerful institutions. They do not serve humanity well when
their pursuit of profits leads to strategies that degrade the environment,
violate human rights and the dignity of employees, endanger public health
and safety and otherwise undermine the welfare of communities.
People who run corporations are mostly decent human beings; many are pillars
of their communities. They care about the environment and other people; they
want to be recognized as good citizens. Corporate abuse of the public
interest does not stem from flaws in the characters of corporate personnel;
it stems from a flaw in the rules under which corporations operate.
State laws that create corporations promote behavior which managers and
shareholders do not condone in their personal lives. Those laws encourage
managers to act as if shareholders are psychopaths -- concerned only that
their company makes more and more money without regard for the human or
environmental costs. They allow managers to excuse the damage they do by
claiming they are only doing what the law requires - promoting the interests
There are 80 million shareholders in the US. It is absurd to presume that
what they have in common is a desire to make money without regard for the
public interest. Nonetheless, by conforming to laws that enshrine that
faulty premise, good people in corporations (managers) make decisions on
behalf of other good people (shareholders) that cause their institutions to
engage in antisocial behavior.
Legislatures pass laws to control that behavior, but they are merely
treating the symptoms of a problem while ignoring its underlying cause. A
better solution, to prevent the problem from occurring in the first place,
is to change the laws that create it.
People understand that doing well and doing good are not mutually exclusive.
Shareholders are increasingly supporting stockholder resolutions that
address issues of corporate responsibility, even when those resolutions
support action that may not be in their short-term financial interest. More
and more corporations are taking steps to protect the environment and to
adopt policies that enrich the communities in which they operate. But these
changes are slow, piecemeal and vulnerable to backsliding. We cannot afford
to wait decades to deal with climate change and other serious threats while
corporations come around voluntarily.
Corporations have the potential to embrace human values if we, the citizens
in whose name the corporate laws were enacted, demand it. To deal
effectively with institutions that exhibit psychopathic behavior, as with
psychopathic individuals, it is essential to provide structure, embodied in
a code of conduct that articulates expectations and standards clearly, sets
limits on such behavior and proscribes appropriate sanctions when the code
We can begin by asking state legislators to enact the Model Code for
Corporate Citizenship, which would add the following sentence to the
corporate law: "The pursuit of profits must not come at the expense of the
environment, human rights, public health and safety, the dignity of
employees or the welfare of communities".
Those 28 words will create a new set of incentives and eliminate the excuse
corporate managers now use to justify antisocial corporate behavior. By
making it clear to everyone in the corporation that protection of the public
interest comes before making money, corporations will evolve and operate in
healthier and more holistic ways which truly reflect the values of those who
own them and those who work for them.
Hopefully, removing the excuse for behaving irresponsibly is all that will
be needed for corporations to start behaving responsibly. If not, the Code
may be amended to make its provisions legally enforceable. Either way, the
Code will have a salutary effect on corporate decision-making. The sooner we
make this change, the better.
Lois A. Levin is a clinical psychologist (Instructor in Psychiatry, Harvard
Medical School). Robert C. Hinkley, originator of the Code for Corporate
Citizenship, is a corporate attorney and former partner of the NY law firm
Skadden, Arps, Slate, Meagher & Flom, LLP.