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corporate accountability
Delaware Just Caved to Billionaire Bullying By Overhauling Its Corporate Law
As Musk is trying to gut the agencies that enforce federal regulations, state corporate law is poised to become even more important. Delaware should have held firm.
Mar 27, 2025
While Elon Musk attacks federal agencies’ ability to protect us from the worst excesses of corporate power, a little known Musk initiative sailed through the Delaware legislature this week. Delaware’s corporate law drew Musk’s ire when its well-regarded Court of Chancery sided with Tesla shareholders and tossed out his $56 billion pay package. Musk packed up his Tesla toys and moved the company’s incorporation to Texas, but his lawyers still pushed Delaware lawmakers to twist the state’s laws to suit his oligarchic interests and give him more power over our lives.
The Delaware House passed Senate Bill 21 (SB 21) on March 25, after the Delaware Senate passed it on March 13. Governor Matt Meyer, who played a central role in the bill’s passage, promptly signed it into law.
Most companies operate under Delaware’s corporate law, with about two-thirds of S&P 500 companies incorporated in the state, and most corporate lawsuits occur in Delaware’s special Court of Chancery. And as corporate interests have eroded many federal tools of corporate accountability—like federal financial, environmental, and worker safety regulations—Delaware corporate law has become one of the last mechanisms of corporate accountability, especially for shareholder lawsuits. Now, as Musk is trying to gut the agencies that enforce federal regulations, state corporate law is poised to become even more important.
Insulating the self-serving decisions of corporate insiders from challenge and gutting the federal agencies and protections that hold corporate power accountable are two sides of the same coin.
Regular shareholders like working peoples’ pensions can bring lawsuits challenging corporate misconduct. But corporate law gives directors and officers broad latitude to make decisions free from liability—even if they are very costly to the corporation and its stakeholders. Courts, however, look more closely at decisions by corporate insiders—including controlling shareholders like Musk, Mark Zuckerberg, and private equity firms that often retain significant stakes in companies after they take them public—when there are conflicts of interest.
The case challenging Musk’s $56 billion Tesla pay package was one of those instances. Upset that a Delaware judge ruled against him in that case, Musk disparaged her and Delaware courts, reincorporated Tesla and SpaceX in Texas, and called on others to do the same.
Corporate insiders convinced Delaware legislators that they were in a hostage situation: Either overhaul their state’s corporate law to give more power to Zuckerberg, private equity firms, and other corporate insiders to everyone else’s detriment by passing SB 21 immediately, or face a mass exodus of corporations and a corresponding slashing of their state budget. Delaware Rep. Madinah Wilson-Anton said, “Our budget is being held hostage and we’re supposed to just listen to the demands, but we have not been told who they’re coming from.”
However, since SB 21 would make it much harder for regular shareholders to hold insiders accountable for their self-serving actions in Delaware courts, many organizations representing regular shareholders have spoken out against the bill, saying its passage would make Delaware less attractive as a state of incorporation. Rep. Wilson-Anton noted: “When we continue to pass bills that are catering to a very small minority of companies that have lost in court and are upset they lost in court, it creates an environment where other companies say, ‘You know what, we’re just gonna stay in our home state because Delaware is just a state where the highest bidder gets to write the law.’” Meanwhile, a recent poll found that only 16% of Delaware voters believe that SB 21 should have passed as is and 63% are less likely to vote for legislators who back SB 21.
Rewriting Delaware corporate law at the behest of Musk and other corporate insiders makes no sense. Insulating the self-serving decisions of corporate insiders from challenge and gutting the federal agencies and protections that hold corporate power accountable are two sides of the same coin. Heads Big Tech oligarchs win, tails the rest of us lose. As the former head of the Office of Information and Regulatory Affairs K. Sabeel Rahman said, “a world without government isn’t a world where we’re not being governed. It’s just we’re being governed in a super undemocratic way.”
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'Profoundly Dangerous': Trump Moves to Seize Control of Independent Agencies
"Americans should understand exactly what this is: A giant gift to the corporate class and a Trumpian power grab."
Feb 19, 2025
U.S. President Donald Trump on Tuesday signed an executive order aimed at bringing the nation's independent agencies—including the Federal Trade Commission and Securities and Exchange Commission—under his control, a sweeping power grab that's expected to spark a legal fight with enormous stakes for the country.
The new executive order, titled "Ensuring Accountability for All Agencies," laments that previous administrations "have allowed so-called 'independent regulatory agencies' to operate with minimal presidential supervision" and states that, going forward, "the president and the attorney general, subject to the president's supervision and control, shall provide authoritative interpretations of law for the executive branch."
The order goes on to require that "all executive departments and agencies"—including those granted some independence from the presidency by Congress—"shall submit for review all proposed and final significant regulatory actions to the Office of Information and Regulatory Affairs (OIRA) within the Executive Office of the President before publication in the Federal Register."
OIRA is part of the Office of Management and Budget, which is run by Project 2025 architect and far-right extremist Russell Vought.
In a fact sheet released alongside the order, the White House specifically names the FTC, the SEC, and the Federal Communications Commission (FCC) as agencies it claims have "exercised enormous power over the American people without presidential oversight."
The new order exempts from its far-reaching mandates the "monetary policy functions of the Federal Reserve."
"Not incidentally, both the FTC and SEC have ongoing investigations or enforcement actions against companies owned by Elon Musk."
Robert Weissman, co-president of Public Citizen, said in a statement that the executive order marks an "illegal" attempt to "shield corporations from accountability and centralize more power with Trump and his minions."
"This is a profoundly dangerous idea for the nation's health, safety, environment, and economy—and for our democracy," he added. "Congress made independent agencies independent of the White House for good reason."
Weissman noted that the independence of agencies such as the FTC and SEC is "designed to enable them to perform these duties without undue political pressure from giant corporations, the super-rich and the super-connected."
"Trump's EO would dissolve that independence and put the agencies under Trump's thumb, ensuring they turn a blind eye to wrongdoing by favored corporations and leave consumers and investors out to dry," Weissman continued. "Not incidentally, both the FTC and SEC have ongoing investigations or enforcement actions against companies owned by Elon Musk. Americans should understand exactly what this is: A giant gift to the corporate class and a Trumpian power grab."
The Washington Post reported that Trump's order sets the stage for "a potential Supreme Court fight that could give him significantly more power over those agencies' decisions, budgets, and leadership." Trump has already trampled decades of legal precedent by firing protected officials without cause, including the former chair of the National Labor Relations Board (NLRB).
"Courts have blocked or limited the reach of some of Trump's executive actions, but legal observers expect that the conservative-dominated Supreme Court may be open to broadening presidential power in at least some of the cases," the Post observed. "The justices are already considering a case regarding the scope of Trump's power over independent agencies, and Tuesday's executive order seems sure to prompt additional legal challenges."
Deborah Pearlstein, a constitutional scholar at Princeton University, told the newspaper that the White House is "deliberately teeing up a major question of constitutional law that will go to the Supreme Court for review."
The Supreme Court is currently controlled by a right-wing supermajority that includes three Trump-appointed justices.
Prior to Trump's order, the U.S. Justice Department—headed by Attorney General Pam Bondi—indicated that it would no longer defend the independence of the NLRB, FTC, and other agencies and would ask the Supreme Court to reverse precedent that has shielded independent agency leaders from termination without cause.
Reuters reported that "about two dozen companies, including Amazon and Elon Musk's SpaceX, have filed lawsuits since last year claiming the president should have the power to fire NLRB members at will."
"Several companies sued by the FTC have filed similar challenges against that agency," the outlet added. "They include Meta Platforms, Walmart, and Cigna's Express Scripts."
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SEC Pauses Climate Disclosure Rules Under Attack by Republican AGs
"Investors need reliable, comparable information about risks that registered companies face and how they are managing those risks," argued Democratic attorneys general who support the paused policy.
Apr 05, 2024
The U.S. Securities and Exchange Commission announced on Thursday that it would pause the implementation of climate disclosure rules for U.S. companies while it awaits the rulings on legal challenges related to those rules.
"The commission has determined to exercise its discretion to stay the final rules pending the completion of judicial review of the consolidated 8th Circuit petitions," the agency said in its order. "The commission will continue vigorously defending the final rules' validity in court and looks forward to expeditious resolution of the litigation."
Alongside @MassAGO, I’m leading a 19-AG coalition seeking to intervene in lawsuits against @SECGov’s rule requiring public companies to disclose comprehensive and comparable information about climate-related risks to investors.
— AG Brian Schwalb (@DCAttorneyGen) April 4, 2024
The rules are meant to force companies to make public any climate risks to their businesses. They have been challenged by attorneys generals from nine different states that are controlled by Republicans.
Meanwhile, 19 Democratic attorneys general are defending the policy, which they said in a Wednesday court filing "provides the states, their residents, and other investors with information about climate-related risks that is critical to making informed investment decisions."
"Investors need reliable, comparable information about risks that registered companies face and how they are managing those risks," the Democrats argued. "Climate-related impacts are undeniably one such category of risk."
Even if the rules were implemented, the SEC has been accused of "watering them down," because they don't include the greenhouse gas emissions related to companies' supply chains.
"Climate-related risks are financial risks, and investors have a right to know the full scope of a public company's emissions profile. This SEC decision will let big corporations off the hook in the United States, allowing them to avoid disclosure of emissions from throughout their supply chains," Sen. Ed Markey (D-Mass.) said when the rules were finalized last month
California has already passed legislation that requires large companies to disclose how much their supply chains are contributing to greenhouse gas emissions.
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'Damning' Probe Finds 80% of Top Carbon Offset Schemes Are 'Likely Junk or Worthless'
Carbon offset projects are "proving a dangerous diversion of political capital and time from the meaningful and just solutions needed to rise to the challenge of the climate crisis," said one researcher.
Sep 20, 2023
A joint investigation published Tuesday by the watchdog group Corporate Accountability and The Guardian finds that nearly 80% of the leading carbon offset schemes backed by corporations and governments in a purported attempt to reduce planet-warming pollution should be deemed "likely junk or worthless."
Carbon offset projects are billed as a way for corporations, governmental bodies, and individuals to compensate for their emissions footprints by investing in efforts to curb pollution elsewhere. Environmentalists have long warned that carbon offset schemes—part of the so-called voluntary carbon market (VCM)—are a way for fossil fuel companies such as Chevron to justify continued oil and gas extraction.
Citing the emissions trading database AlliedOffsets, The Guardian noted Tuesday that "the 50 most popular global projects include forestry schemes, hydroelectric dams, solar and wind farms, waste disposal, and greener household appliances schemes across 20 (mostly) developing countries."
The new joint investigation finds that 39 of the top 50 carbon offset projects contain at least one "fundamental failing that undermines its promised emission cuts," making them "likely junk."
The analysis characterizes a project as "likely junk" if there's "compelling evidence, claims, or high risk that it cannot guarantee additional, permanent greenhouse gas cuts, among other criteria."
"In some cases, there was evidence suggesting the project could leak greenhouse gas emissions or shift emissions elsewhere," The Guardian explained. "In other cases, the climate benefits appeared to be exaggerated or the project would have happened independently—with or without the voluntary carbon market."
Rachel Rose Jackson, director of climate research and international policy at Corporate Accountability, said in a statement that "the findings are extremely damning of a scheme that the world's largest emitters repeatedly tout as a lynchpin in solving the climate crisis."
"The VCM is proving a dangerous diversion of political capital and time from the meaningful and just solutions needed to rise to the challenge of the climate crisis," said Jackson.
"We cannot afford to waste any more time on false solutions."
The investigation is just the latest research to cast serious doubt on the effectiveness of carbon offset initiatives as companies and governments around the world, including the United States, increasingly invest resources in unproven voluntary carbon trading schemes as they face mounting backlash for doing little to phase out fossil fuels.
Last week, Carbon Market Watch released an analysis from experts at the University of California, Berkeley showing that popular carbon offset projects focused on forest preservation exaggerate their emissions reductions and are ineffective at combating deforestation, a major threat to the climate.
In their investigation, Corporate Accountability and The Guardian pointed to a major forest conservation project in Zimbabwe that "was reported to have had so many exaggerated and inflated claims—and probably shifted emissions elsewhere—that it was described as 'having more financial holes than Swiss cheese.'"
"In the U.S., the most problematic project is the world's largest carbon capture and storage plant in Wyoming, which has benefited from generous taxpayer subsidies, but where the vast majority of the captured CO2 has been released into the atmosphere or sold to other fossil fuel companies to help extract hard-to-reach oil," The Guardian reported, citing the Institute for Energy Economics and Financial Analysis.
Anuradha Mittal, director of the Oakland Institute, told the newspaper that "the ramifications of this analysis are huge, as it points to systemic failings of the voluntary market, providing additional evidence that junk carbon credits pervade the market."
"We cannot afford to waste any more time on false solutions," Mittal added. "The issues are far-reaching and pervasive, extending well beyond specific verifiers. The VCM is actively exacerbating the climate emergency."
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Climate Groups Reject 'Risky, Untested' Technofixes in IPCC Report
"Solving the climate crisis is not about what works on paper but what delivers in practice. There is no time to waste with false solutions."
Mar 20, 2023
Longtime critics of "false solutions" to the fossil fuel-driven climate emergency responded to a United Nations report released Monday by reiterating their warnings about relying on underdeveloped and untested technologies that could enable major polluters to continue producing massive amounts of planet-heating emissions.
Noting the 2015 Paris agreement's two primary temperature targets for this century, the new Intergovernmental Panel on Climate Change (IPCC) report states that "all global modeled pathways that limit warming to 1.5°C with no or limited overshoot, and those that limit warming to 2°C, involve rapid and deep and, in most cases, immediate" greenhouse gas (GHG) emissions reductions in all sectors this decade.
"We must heed the IPCC's urgent messages, without falling into the trap of assuming that carbon dioxide removal will save the day."
Modeled mitigation pathways, the report continues, "include transitioning from fossil fuels without carbon capture and storage (CCS) to very low- or zero-carbon energy sources, such as renewables or fossil fuels with CCS, demand-side measures and improving efficiency, reducing non-CO2 GHG emissions," and carbon dioxide removal (CDR).
As the document details:
CCS is an option to reduce emissions from large-scale fossil-based energy and industry sources provided geological storage is available. When CO2 is captured directly from the atmosphere (DACCS), or from biomass (BECCS), CCS provides the storage component of these CDR methods. CO2 capture and subsurface injection is a mature technology for gas processing and enhanced oil recovery. In contrast to the oil and gas sector, CCS is less mature in the power sector, as well as in cement and chemicals production, where it is a critical mitigation option. The technical geological storage capacity is estimated to be on the order of 1000 GtCO2, is more than the CO2 storage requirements through 2100 to limit global warming to 1.5°C, although the regional availability of geological storage could be a limiting factor. If the geological storage site is appropriately selected and managed, it is estimated that the CO2 can be permanently isolated from the atmosphere.
"Implementation of CCS currently faces technological, economic, institutional, ecological environmental and socio-cultural barriers," the report notes. "Currently, global rates of CCS deployment are far below those in modeled pathways limiting global warming to 1.5°C to 2°C. Enabling conditions such as policy instruments, greater public support, and technological innovation could reduce these barriers."
The report further says that "biological CDR methods like reforestation, improved forest management, soil carbon sequestration, peatland restoration, and coastal blue carbon management can enhance biodiversity and ecosystem functions, employment and local livelihoods. However, afforestation or production of biomass crops can have adverse socioeconomic and environmental impacts, including on biodiversity, food and water security, local livelihoods, and the rights of Indigenous peoples, especially if implemented at large scales and where land tenure is insecure."
While the world's top scientists—and the governments that signed off on the report—recognized issues with CCS and CDR, climate campaigners expressed frustration that such technologies were featured as partial solutions.
"It's very alarming to see carbon dioxide removal featuring so centrally in the IPCC report," declared Sara Shaw at Friends of the Earth International (FOEI). "We can't rely on risky, untested, and downright dangerous removals technologies just because big polluters want us to stick to the status quo."
"A fair and fast phaseout of oil, gas, and coal needs to happen in this decade, and it can, with the right political will," she stressed. "We must heed the IPCC's urgent messages, without falling into the trap of assuming that carbon dioxide removal will save the day."
Fellow FOIE leader Hemantha Withanage explained that "in my country, Sri Lanka, the impacts of climate change are being felt now. We have no time to chase fairy tales like carbon removal technologies to suck carbon out of the air."
"The IPCC evidence is clear: Climate change is killing people, nature, and planet," he said. "The answers are obvious: a fair and fast phaseout of fossil fuels, and finance for a just transition. The fantasy of overshooting safe limits and betting on risky technofixes is certainly not a cure for the problem."
Lili Fuhr at the Center for International Environmental Law agreed that "the takeaway of the IPCC synthesis is irrefutable: An immediate, rapid, and equitable fossil fuel phaseout is the cornerstone of any strategy to avoid catastrophic levels of global warming."
"Building our mitigation strategies on models that instead lock in inequitable growth and conveniently assume away the risks of technofixes like carbon capture and storage and carbon dioxide removal ignores that clarion message and increases the likelihood of overshoot," Fuhr warned. "The most ambitious mitigation pathways put out by the IPCC set the floor, not the ceiling, for necessary climate action.
Research shows that overshooting Paris temperature targets, even temporarily, could dramatically raise the risk of the world experiencing dangerous "tipping points," as Common Dreams reported in December. The IPCC report notes that "the higher the magnitude and the longer the duration of overshoot, the more ecosystems and societies are exposed to greater and more widespread changes in climatic impact-drivers, increasing risks for many natural and human systems."
As Corporate Accountability director of climate research and policy Rachel Rose Jackon put it Monday: "Breaching 1.5°C is not an option. Governments will be effectively signing millions of avoidable death warrants for those who contributed least to the crisis."
While arguing that the IPCC document "demands a last and final reckoning" that leads to Global North governments "doing their fair share," the campaigner also emphasized that "the report should have actually named the solutions that will keep us below 1.5°C instead of leaving the door open for an inadequate suite of industry-backed removals and dangerous distractions."
Food & Water Watch executive director Wenonah Hauter targeted U.S. lawmakers and President Joe Biden in a statement Monday.
"The IPCC is sending one key message above all else: We must stop burning fossil fuels, drilling for fossil fuels, and building new infrastructure to deliver fossil fuels," Hauter said. "Unfortunately, policymakers continue to lock in new dirty energy schemes—most notably the Biden administration's approval of a massive new oil drilling project in Alaska."
"Tragically, Congress and the White House continue to waste money on carbon removal technologies that have been a failure. Relying on these scams instead of taking actions to stop fossil fuel expansion will only lead to further climate catastrophe," she added. "President Biden's actions to expand oil and gas drilling and ramp up fossil fuel exports undermine his professed climate goals and invite further catastrophe. The IPCC's message is clear, and political leaders must answer the call with actions to match the moment."
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Failure of SVB Confirms Surprising Extent of Corporate Fraud
The estimated prevalence of corporate fraud is much larger than what is currently being reported, with an average of 10% of large publicly traded firms committing securities fraud every year.
Mar 14, 2023
The high-profile and sudden failure of Silicon Valley Bank, which hid huge losses from its depositors, investors, and regulators, highlights the dangers of corporate fraud for our financial system. It confirms the kind of problems highlighted by a recent study published in the Journal of Financial Economics estimating that only one-third of corporate frauds are detected, with an average of 10% of large publicly traded firms committing securities fraud every year. This means that the true extent of corporate fraud is much larger than what is currently being reported. The study also estimates that corporate fraud destroys 1.6% of equity value each year, which equals to $830 billion in 2021.
Consider three prominent examples from the last couple of years. FTX, a trading platform for crypto investors, was accused by the U.S. Securities and Exchange Commission of defrauding its investors by steering money from the company into another venture between 2019 and 2022. The company's majority owner, Sam Bankman-Fried, allegedly used the cash to purchase homes in the Bahamas, invest in other companies, and fund favored political causes. When crypto assets took a significant plunge in 2022, the cash spigot went dry at both FTX and the other venture, leading to federal prosecutors stepping in to issue fraud charges and bankruptcy for the company.
Wirecard, an electronic payments firm based in Munich, Germany, faced the biggest corporate fraud case in German history in 2022, with former CEO Markus Braun and two senior executives facing multiple years in prison if convicted. Another senior executive, Jan Marsalek, is on the run and is reportedly hiding out in Russia. Wirecard declared insolvency in 2020 after authorities discovered $1.9 billion was missing from the company's accounts, amid allegations from German regulators that the money never existed at all.
Luckin Coffee, a China-based company, was embroiled in a legal quagmire stemming from a 2020 fake revenue scandal. Internal financial analysts discovered the company's growth was artificially inflated due to bulk sales to businesses linked to the company's chairman, and management had fraudulently engineered the purchase of raw materials from suppliers. When these investigations became public, investors fled and the company's share price slid.
Fraud occurs in many smaller and mid-size companies as well. In fact, such occurrences may be more common at smaller companies, which have less rigorous risk management and oversight policies.
To mitigate the risk of corporate fraud, companies - big and small - need to have strong risk management and oversight systems in place. This includes having clear policies and procedures for detecting and preventing fraud, as well as regular training and education for employees on how to recognize and report fraud.
One important aspect of risk management is having an effective internal control system. This includes having a system of checks and balances in place to prevent fraud from occurring in the first place, as well as systems for detecting and investigating fraud if it does occur. This can include measures such as separating duties among employees, implementing segregation of duties, and conducting regular internal audits.
Another key is having an effective compliance program. This includes having policies and procedures in place to ensure that the company is in compliance with relevant laws and regulations, as well as having a system in place for identifying and reporting any potential violations.
The recent high-profile cases of corporate fraud, such as the failure of Silicon Valley Bank, highlight the urgent need for stronger outside regulations and consumer protections. While companies need to have strong risk management and oversight systems in place to prevent and detect fraud, these efforts alone may not be enough to mitigate the risk of corporate fraud.
The estimated prevalence of corporate fraud is much larger than what is currently being reported, with an average of 10% of large publicly traded firms committing securities fraud every year. Stronger outside regulations and consumer protections can help prevent corporate fraud and hold companies accountable for their actions. This can include increased regulatory oversight, stronger penalties for fraud, and more transparency in financial reporting. All companies, big and small, must take proactive steps to prevent and detect fraud, but stronger outside regulations and consumer protections are necessary to ensure the integrity of our financial system.
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Constraining Corporate Purpose Shouldn't be the Corporation's Decision
No one has a right to incorporate. And if entrepreneurs don't want to take the concerns of the community into account when conducting business, they are free to forego limited liability incorporating grants them and put their personal property on the line.
Jan 10, 2023
The New York Times recently asked the question: “Have the Anticapitalists Reached Harvard Business School?“ In past generations, Students at Harvard Business School, Yale School of Management, and other similar institutions would almost certainly learn that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception fraud.”
This is Milton Friedman, in a famous 1970 Op-Ed, also published in the New York Times. Now, students of elite business schools are, apparently, dissatisfied with this purpose, and are eager to question and even challenge this fundamental assumption—at least for a while. “[M]anagement professors have realized that their students, more than in previous decades, are looking for lessons that go beyond accounting,” the Times reports. “They want to discuss business’s role in society, how it has created social ills and how it may help solve them. Mr. Rouen, at Harvard, said the demand for classes on social impact and E.S.G. had been so high that those themes had been integrated into nearly every introductory class, including accounting.”
This is not an entirely new development. A few years ago, the influential Business Roundtable issued a statement regarding corporate purpose. The statement suggested that—again, contrary to Milton Friedman—corporations should no longer strive solely to increase shareholder value. Corporations should also consider, the statement suggests, the needs of the corporation’s customers, employees, suppliers, and communities generally. Increasing shareholder value is still a goal, naturally. But this is the final point in the Business Roundtable’s statement, rather than first and foremost, as previously presumed.
If a new generation of CEOs, business school graduates, and management gurus can change the direction of global capitalism, address climate change, reduce poverty, etc., then we should all be grateful. But this entire discussion raises an obvious question. Why should these individuals choose the ultimate purposes of our most powerful corporations, rather than an institution that, at least theoretically, expresses the goals and values of the entire population—that is, the government and its legal system?
A corporation is, after all, a legal institution offering a certain benefit to entrepreneurs—limited liability. A state’s laws grant individuals, provided they file certain forms in certain state offices, the ability to conduct business in the name of a fictional person. The business’ liabilities are then limited, in all but very rare cases, to that fictional person. This protects the personal wealth of entrepreneurs. Individuals can engage in business enterprise without having to expose their personal assets to the liabilities of failure. My business might file for bankruptcy, but thanks to the protection of the laws of incorporation, the business’ creditors can’t seize my home if the business’ liabilities exceed its assets.
The social benefit of limited liability? It encourages entrepreneurship. Ostensibly, economic growth benefits everyone. But with looming environmental threats and persistent global poverty, students at even the most elite business schools are growing skeptical. As the Times reports, “Curtis Welling, a professor at Dartmouth’s Tuck School of Business, asks his students every year whether capitalism needs to be reformed. A decade ago, roughly one-third said yes. This year, two-thirds said yes.”
This leads to the question of corporate purpose. Given that limited liability is a benefit granted to individuals by a society—specifically, by a state, through its laws—why shouldn’t the very laws which create the institution require beneficiaries (entrepreneurs) to consider the corporation’s customers, employees, suppliers, and communities generally, rather allow them not to and hope that they do?
In the U.S., corporate law already requires corporate bylaws to contain certain provisions for the protection of shareholders. In some countries, co-determination laws give workers representation on a corporation’s board of directors. There is no reason corporate statutes could not require all bylaws to consider the needs of customers, employees, suppliers, and communities in general, or even to offer other interest groups board representation. Perhaps communities subject to environmental pollution, for example, should have the same rights against the managers of corporations that shareholders have now. The possibilities are limited only by our imagination and political will.
If corporate protection is a creation of the state, then a constraint on its benefits is a condition on a state endowment rather than a limitation on some kind of a pre-state endowment or right.
To be clear, this legal entity, the corporation, is a creation of the state, not simply private individuals associating with each other. The individuals forming a corporation don’t have to get consent from all of the individuals in a society to limit their claims to the corporation’s holdings, rather than the proprietors’ personal property. Owners don’t have to convince us to treat their business as a different person. That protection is granted by the law.
This means constraining corporate purpose cannot possibly be said to “take” anything from the entrepreneurs which they would have had independently of the state, as taxation is often characterized. Nor is it a state imposition on private property, as regulation is often characterized. If corporate protection is a creation of the state, then a constraint on its benefits is a condition on a state endowment rather than a limitation on some kind of a pre-state endowment or right. No one has to incorporate, after all. Entrepreneurs who don’t want to take the concerns of the community into account when conducting business would be free to forego limited liability and put their personal property on the line.
If the problem is that corporations’ failure to take these other interests into account could cause social problems, then the law—which after all literally creates these entities—should address the problem. Corporate purpose should be constrained by something like Sen. Elizabeth Warren's Accountable Capitalism Act rather than the goodwill of enlightened CEOs and Harvard Business School grads.
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Calls for the Biden Administration to Prioritize Our Water Infrastructure
Newly introduced legislation would help counteract decades of underinvestment in water infrastructure that's been plaguing America’s drinking water systems.
Mar 05, 2021
Last week, IATP joined Food & Water Action and nearly 550 other national and regional organizations including Action Center on Race & The Economy, Center for Biological Diversity and Corporate Accountability in support of the Water Affordability, Transparency, Equity and Reliability (WATER) Act. This legislation was introduced in the House and the Senate last week by Reps. Brenda Lawrence and Ro Khanna and Sen. Bernie Sanders and is backed by 71 other Democratic lawmakers.
Four years ago, this month, we wrote that clean water was one of the first casualties of Trump administration's partisan attacks to roll back regulations. The use of the Congressional Review Act to repeal the Stream Protection Rule, which was established to protect 6,000 miles of streams and 52,000 acres of forests and was passed after extensive public consultation, was indicative of the administration's callous approach to protecting the nation's communities and its environment.
As it is, decades of underinvestment in water infrastructure have been plaguing America's drinking water systems. The Guardian reported last week that federal funding for water systems has fallen by 77% in real terms since its peak in 1977. This has left local utilities scrambling to raise funds to pay for infrastructure upgrades, comply with safety standards for toxic contaminants such as Per-and Polyfluorinated Substances (PFAS), lead and algae blooms, and adapt to extreme weather conditions like drought and floods linked to global heating.
So, it is indeed urgent and necessary that building America's public water infrastructure becomes a priority for the Biden administration. The WATER Act of 2021, as Sen. Sanders puts it, "is the most comprehensive approach to improving our water systems and helping ensure that every person has access to safe and clean water in the United States."
The WATER Act of 2021 "establishes increased yearly mandatory spending", up to $34.85 billion per year for drinking water and clean water infrastructure, creating up to one million jobs throughout the economy. It not only responds to water accessibility and affordability, but also details a path for upgrading public water systems to remove highly toxic and hazardous chemicals like lead and PFAS from drinking water while also maintaining public control over these systems.
The WATER Act is introduced against the background of COVID-19-related crises in the U.S. that has further worsened the inequities in water access, drawing sharper attention to environmental justice concerns.
Most importantly, these programs include a specific focus on providing support for rural and small municipalities, Indigenous communities, and low-income Black and brown communities who face disproportionate water issues. The WATER Act of 2021 will help the United States move towards making the internationally recognized right to water a reality in this country and simultaneously help meet targets linked to several United Nations Sustainable Development Goals (and indicators) especially those on water and sanitation.
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