PETER H. HUANG, University of Colorado Law School
Email: Peter.Huang@colorado.edu

Stakeholder capitalism conceives of capitalism with companies maximizing their long-term value, while considering in addition to the interests of their shareholders, also the interests of all their other stakeholders. Examples of such additional stakeholders include customers, employees, communities, creditors, competitors, society at large, and our planet. America today does not have stakeholder capitalism. Instead, America presently has shareholder capitalism, in which publicly held corporations only maximize their stock value to shareholders.

This Essay analyzes proposals for the United States Securities Exchange Commission to require that all reporting companies make periodic mandatory Environmental, Social, and Governance (ESG) disclosures of comparable, standardized, and quantifiable metrics. These required, ongoing ESG report cards would measure the sustainability and ethical impacts of companies on other stakeholders besides shareholders. In effect, this one simple regulatory change means that reporting companies effectively will maximize shareholder value subject to ESG constraints regarding other stakeholders’ interests, just as corporations now maximize profits subject to economic, legal, market, scientific, and technological constraints.

This Essay analyzes how mandatory periodic ESG disclosures can realize diversity, sustainability, and stakeholder capitalism. This Essay also explains why corporate greed in the sense of shareholder capitalism is part of American popular culture. Finally, this Essay examines possible causes of the belief that corporate greed and individual greed are virtuous.

TAISU ZHANG, Yale University - Law School
Email: taisu.zhang@aya.yale.edu
JOHN MORLEY, Yale Law School, European Corporate Governance Institute (ECGI)
Email: john.morley@yale.edu

This article argues that the rise of the modern state was a necessary condition for the rise of the business corporation. A typical business corporation pools together a large number of strangers to share ownership of residual claims in a single enterprise with guarantees of asset partitioning. We show that this arrangement requires the support of a powerful state with the geographical reach, coercive force, administrative power, and legal capacity necessary to enforce the law uniformly among the corporation’s various owners. Other historical forms of rule enforcement—customary law or commercial networks like the