Today’s Wall Street Journal carries an op-ed by the two senior directors of the Harvard Program on Corporate Governance, which is both fascinating as to how corporations are managed and vital to an understanding of the job of a corporate director.

Simple (if simplistic) history: when I started practice many moons ago, it was quite clear that the role of the corporation was to profit shareholders by all legal means. Society recently has offered different goals, and ESG values have permeated corporate governance discussions. One year ago, the Business Round Table issued a famous Statement by over 180 major CEOs redefining the stakeholders to whom corporations owed duties to include employees, citizens, society.

So Professor Julian Bebchuk, chair of the Program, has attempted to survey the 180 companies signed on to the Statement. He found almost none of the companies responding had cleared the Statement with their Boards, and there is little reflection in amended company statements to support replacement of shareholders as the recipients of corporate benefits.

Interesting points: since the Statement calls for a fundamental shift in the role of the corporation (to whom do they answer?), the failure to get Board approval proves there will be no meaningful change; evidence on the ground proves that no changes are occurring.

The legal issues also are important: is it even possible to have ESG unless it can be convincingly argued that in the particular case it will add to shareholder returns? Most major companies are subject to Delaware law which is quite clear that primary duty is to shareholders. If you want to make societal goals primary, there is a wholly different mode of incorporation called a Public Benefits Corporation with its own set of statutes. This implies that a company formed under the General Corporations Act is not permitted to adopt a strategy unless it is believed by the board to ultimately profit shareholders.

Can ESG be saved by an assertion that at some point a corporation doing the right thing for society will surely be favored and be profitable and free from loss of customers and loss of good will? Need boards make specific findings in such a case, with assumptions and time lines? Do all beneficiaries of ESG realistically qualify to be part of an argument leading to shareholder value? Why does Professor Bebchuk suggest that perhaps ESG for the sake of stakeholders other than the equity is legally problematic (as well as not being pursued by its putative proponents)?