Can the Modern Corporation Operate Sustainably?

Abstract

In the shareholder primacy model of the modern company, the primary role of corporate law is understood to be minimizing the agency problem between shareholders as owners and corporate management as their agents. The resulting focus on shareholder wealth maximization leaves little space for consideration of corporate sustainability. The shareholder primacy model focuses on the company from the perspective of its shareholders. It is however possible to consider the company from its own perspective as an entity operating in the world. Corporate value extends beyond financial value realised for shareholders to the value of the company operating as an entity in the world. How persona and the status of the corporation as a legal person relates to wider sociological and ecological concepts is considered. This chapter sets out an understanding of the modern company as an entity and explores whether the modern company understood through this new paradigm can operate sustainably.

Keywords: modern corporation; corporate legal history; shareholder primacy; entity theory; English East India Company; incorporation; sustainability