LAW AND SOCIAL JUSTICE: OPERATIONALIZING STAKEHOLDER THEORY IN GOVERNMENTAL REGULATIONS AND CORPORATE DECISION-MAKING FOR SOCIAL AND ECONOMIC SUSTAINABILITY, RESILIENCE, AND DEMOCRACY

It is time to shed the twentieth century capitalistic ways of shareholder maximization. It is time to fashion a “new” capitalism which retains the competitive dynamic but redefines its force to create a more socially just society. That is a huge order, to say the least. But, there is a path to that end.

The 2019 U.S. Business Roundtable’s announcement, the creation of the Benefit Corporation, and the United Kingdom’s 2006 Companies Act began that process. These developments are enabling the beginning of the redefining of one of the bedrocks of capitalism: fiduciary obligation. The methodology of these developments is the stakeholder theory of corporate and governmental decision-making. Drawing on concepts such as utilitarian philosophy, social justice, and democratic principles, this paper explores the realities and potential of stakeholder corporate governance on concepts of corporate governance.

The stakeholder approach to corporate and governmental decision-making affects all aspects of society. However, it requires a paradigm shift in our thinking to shape a holistic, comprehensive, and sustainable perspective. Those who are affected by market decisions have a fundamental right to have their interests considered, whether it be through corporate decision-making or governmental regulations. Stakeholder theory may take many forms in its application to a capitalistic market.

It shares two basic concepts with democracy: equity and sustainability–equity because it is fair and brings all parties “[to] the table” and sustainable because all parties are invested and heard.