Shareholder Rights and Zero-Sum CSR: Strategies for Reconciliation

Abstract

CSR involves the management of a corporation using the resources of that corporation to promote the welfare of non-shareholders (disadvantaged members of the community, the global poor, animals, future generations etc). In some cases CSR is used as a tactic to augment the competitive strength of a firm. We can call this “instrumental CSR” or “shared-value CSR”. In these cases, promoting non-shareholder welfare is seen as the best way of maximising shareholder value over the long term. In other cases, however, promoting the welfare of non-shareholders may be expected to compromise the economic interests of shareholders to some extent; one group benefits at the expense of the other. Call this “zero-sum” CSR. If we accept the so-called principle of shareholder primacy, Zero-Sum CSR appears morally problematic. This principle says that shareholders have a unique and privileged moral status in the corporation. More specifically, it says that shareholders, in virtue of their special relationship with management, are entitled to have the corporation governed in a way that is aimed at maximising their economic interests. My aim is to carefully distinguish three argumentative strategies for reconciling Zero-Sum CSR with the moral rights of shareholders.

Keywords: CSR; shareholder primacy; stakeholder theory