Consumer goods makers and retailers investing in sustainably made products after years of shopper outcry, say they face an uphill struggle convincing people to switch when those products cost more or look inferior.
I’m willing to compromise - as in, if it costs them $4 more to produce, they charge $2 more for it, we’re splitting the difference.
If a public company did this, one that has a board of directors and is traded on the stock market, the managers would be liable for not doing their fiduciary duty to maximize shareholder value. Well, they would liable if it wasn’t part of a long term strategy to capture the totality of consumer surplus.
In 2014, the United States Supreme Court voiced its position in no uncertain terms. In Burwell v Hobby Lobby Stores Inc., the Supreme Court stated that “Modern corporate law does not require for profit corporations to pursue profit at the expense of everything else”.
Oof. That’s fair. That explains Woke, Inc. and other critiques of wokism in the boardroom: because these initiatives are argued to be detracting from shareholder value by creating unnecessary inefficiencies.
I’m not quite understanding your point, could you elaborate?
To be fair, while companies may not be legally obligated to maximise profit/shareholder value, CEO bonus structures often do incentivise doing exactly that. And perpetuating the myth does give boards an excuse to do whatever they want.
It’s just yet another reason why we shouldn’t give any credit to any of these articles. Corporations can’t expect us to foot the entire bill, they can’t / won’t make less profit, so the only option I see is for it to be regulated such that they have to do it. Otherwise, it’s never getting done.
If a public company did this, one that has a board of directors and is traded on the stock market, the managers would be liable for not doing their fiduciary duty to maximize shareholder value. Well, they would liable if it wasn’t part of a long term strategy to capture the totality of consumer surplus.
That is a common myth:
https://legislate.ai/blog/does-the-law-require-public-companies-to-maximise-shareholder-value
https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits
Oof. That’s fair. That explains Woke, Inc. and other critiques of wokism in the boardroom: because these initiatives are argued to be detracting from shareholder value by creating unnecessary inefficiencies.
So, okay, cool. Thanks for the update.
I’m not quite understanding your point, could you elaborate?
To be fair, while companies may not be legally obligated to maximise profit/shareholder value, CEO bonus structures often do incentivise doing exactly that. And perpetuating the myth does give boards an excuse to do whatever they want.
It’s just yet another reason why we shouldn’t give any credit to any of these articles. Corporations can’t expect us to foot the entire bill, they can’t / won’t make less profit, so the only option I see is for it to be regulated such that they have to do it. Otherwise, it’s never getting done.