Expectations regarding the role of the corporation in society are shifting. As a consequence, many investors and companies are reexamining and adjusting the way they do business. For decades, the nearly unquestioned wisdom, at least in the United States, has been that, as economist Milton Friedman famously declared in 1970, 'the social responsibility of business is to increase its profits' in the service of shareholders. 1 That foundational premise has started to crack. Many business leaders, investors, legal practitioners, and scholars are now calling into question the "shareholder primacy" business model. Instead, they say, a corporation must jointly serve the interests of many stakeholders, including customers, suppliers, employees, local communities, and shareholders, and should no longer focus narrowly on "maximizing shareholder value." 2. One manifestation of these sentiments is the emergence of non-financial corporate performance metrics, often referred to as "environmental, social, and governance," or just "ESG."
