Robert Reich: How We Ended Up With Corporations That Serve Shareholders, Not Customers
http://billmoyers.com/2014/08/12/the-rebirth-of-stakeholder-capitalism/
Patagonia, a large apparel manufacturer based in Ventura, California, has organized itself as a “B-corporation.” That’s a for-profit company whose articles of incorporation require it to take into account the interests of workers, the community and the environment, as well as shareholders. The performance of B-corporations according to this measure is regularly reviewed and certified by a nonprofit entity called B Lab.
To date, over 500 companies in sixty industries have been certified as B-corporations, including the household products firm “Seventh Generation.” In addition, 27 states have passed laws allowing companies to incorporate as “benefit corporations.” This gives directors legal protection to consider the interests of all stakeholders rather than just the shareholders who elected them.
...
Although the law didn’t require companies to maximize shareholder value, shareholders had the legal right to replace directors. The raiders pushed them to vote out directors who wouldn’t make these changes and vote in directors who would (or else sell their shares to the raiders, who’d do the dirty work).
Since then, shareholder capitalism has replaced stakeholder capitalism. Corporate raiders have morphed into private equity managers, and unfriendly takeovers are rare. But it’s now assumed corporations exist only to maximize shareholder returns. Are we better off? Some argue shareholder capitalism has proven more efficient. It has moved economic resources to where they’re most productive, and thereby enabled the economy to grow faster.