Media Mentions

Stakeholder-centric capitalism may be the hot new trend in the corporate world, but the concept traces its roots back much further than last year’s headline-grabbing statement from the Business Roundtable. In fact, the US already tried a version of “stakeholderism” back in the 1980s when it introduced “constituency statutes” which allowed companies to consider how an acquisition might negatively affect people and communities as they defended themselves against corporate raiders. Given the myriad global catastrophes that have led to this new wave of stakeholder capitalism, it is safe to surmise that “constituency statutes” did not achieve everything they set out to. Lucian Bebchuk, a Harvard Law professor, has looked more deeply into the issue and has a sobering message. In new research released this week, Mr Bebchuk — along with Kobi Kastiel of Tel Aviv University and Roberto Tallarita of Harvard Law School — found “constituency statutes” to have been an abject failure for stakeholders.

A reader once said to me that Robinhood, the retail brokerage for young people trading on their phones, “is one giant momentum algo.” If you are bored during a coronavirus lockdown and you can’t go to a casino or bet on sports, you might decide to start gambling on stocks instead. If you decide to start gambling on stocks you might download Robinhood, which is, stereotypically, the app for gambling on stocks. If you download Robinhood … then what? You have heard that it might be fun to gamble on stocks, but you do not necessarily know which stocks are fun to gamble on. There are a lot of stocks and they all, from inside an app, look kind of the same. What is the stock discovery mechanism? If you walk into a casino, the layout of the casino will tell you what to gamble on: There are slot machines right in front of you with blinking lights, there are people shouting around the craps tables, etc. ... I was too generous to the CEOs! I shouldn’t have said “and the board.” Lucian Bebchuk and Roberto Tallarita did a study of the Business Roundtable statement and got this hilarious result: To probe what corporate leaders have in mind, we sought to examine whether they treated joining the Business Roundtable statement as an important corporate decision. Major decisions are typically made by boards of directors. If the commitment expressed in the statement was supposed to produce major changes in how companies treat stakeholders, the boards of the companies should have been expected to approve or at least ratify it.

On August 19, 2019 , the Business Roundtable, a collection of CEOs of the country’s biggest companies, at the time helmed by JPMorgan Chase CEO Jamie Dimon, announced a fundamental rethinking of what it means to be a corporate entity in the U.S. Previously, the Roundtable had held that a company’s key obligation was to increase the value of its stock for its shareholders. But the 2019 announcement, signed by 181 business leaders, committed to provide value to the full range of a company’s “stakeholders,” including their employees, their customers, and their communities—as well as shareholders. The move was praised as a monumental step in the idea of corporate responsibility but also held up as a possible empty promise. One year later, how has the commitment held up? It depends on whom you ask. Lucian A. Bebchuk and Roberto Tallarita, researchers at the Harvard Law School Program on Corporate Governance, say it’s been little more than words. They examined promises of stakeholder governance by looking at how involved a company’s board was in the decision to adopt that pledge, and if the board’s corporate governance guidelines were amended afterward to reflect a commitment to bring value to stakeholders.

In 2009, the year Uber launched, FedEx made a change to its business model. The shipping firm had previously relied on independent contractors who owned their own trucks and were paid by the delivery or mile rather than the hour. For years, the company faced an onslaught of lawsuits arguing that the people who delivered mail in a FedEx branded truck and uniform should actually be classified as employees, rather than contractors, and protected by minimum wage and other labor laws. ... As FedEx and other franchises have already shown, the franchise model can serve a similar purpose to the independent contractor model. While there are legitimate uses for both models, says Benjamin Sachs, a professor of labor and industry at Harvard Law School, “they are also schemes to avoid taking responsibility for workers […] And if they offload their responsibility onto someone who can’t bear it, then the driver is left holding an empty bag.”

An op-ed by Cass Sunstein: What if nudges fail? Because of the coronavirus, that question has suddenly become urgent. Efforts to nudge people to wear masks, to engage in social distancing, and to use other protective measures have done some good. But with more than 170,000 deaths, they cannot be counted a smashing success. A nudge is an intervention that steers people in particular directions, but that fully preserves freedom of choice. A GPS device nudges. So does a calorie label or a warning (“this product contains peanuts”). Whenever a nudge fails, there are three major options. The first is to give up — declare victory and insist that freedom worked, because a major point of nudging is to allow people to go their own way. The second is to nudge better. The third is to turn to some other tool, such as a mandate or a ban.

An article Bob Bauer and Jack Goldsmith: The final report on Russian electoral interference by the Senate Select Committee on Intelligence notes “several ways in which hostile actors [are] able to capitalize on gaps in laws or norms and exert influence.” And it highlights in particular the problem posed by “a campaign’s status as a private entity intertwined with the structures of democracy.” The report calls on campaigns to build protections against becoming channels for illicit foreign state influence. It urges future campaigns to “perform thorough vetting of staff, particularly those [with] responsibilities that entail interacting with foreign governments”; “ensure that suspicious contacts with foreign governments or their proxies are documented and can be shared with law-enforcement”; and reject the “use of foreign origin material, especially if it has potentially been obtained through the violation of U.S. law.

"Bloomberg: Balance of Power" focuses on the intersection of politics and global business. A preview of night 3 of the Democratic National Convention, as vice presidential nominee Kamala Harris takes the stage. Guests: Rep. Joyce Beatty, National Urban League CEO Marc Morial, Harvard Law Professor Cass Sunstein, Pattern Energy CEO Mike Garland.

Some Connecticut school districts across the state are getting ready to reopen their doors, but with coronavirus cases rising across the country, more parents are considering keeping children at home, Online learning continues to come with a lot of roadblocks and technical issues for parents, students and teachers. So what is the alternative? How can students get a quality education while still staying safe? ... Guests: ... Elizabeth Bartholet - Morris Wasserstein Professor of Law and Faculty Director, Child Advocacy Program at Harvard Law

An op-ed by Cass Sunstein: In the near future, Congress should create a Commission on Electoral Integrity, with only one task: protecting the U.S. from foreign interference in its elections. That is the unmistakable lesson of Volume 5 of the Senate’s Select Committee on Intelligence report on “Russian Active Measures Campaigns and Interference in the 2016 Election.” Put to one side your own political convictions. Don’t ask whether members of Donald Trump’s campaign worked in concert with Russian officials to turn the election to him.

The one certainty about the Business Roundtable’s “Statement on the Purpose of a Corporation” is that it has elevated that topic to a new height in global policy debates. A year after the BRT announced its new view of purpose on Fortune’s cover, “stakeholder capitalism”—what it means, and what, if anything, should be done to advance it—is a hot issue, sparking hotly opposed views. As the U.S. election approaches, it will only get hotter. The BRT’s statement was prompted by JPMorgan Chase CEO Jamie Dimon, who was then the BRT’s chairman, and was signed by 184 CEOs of major U.S. corporations... “The statement is largely a rhetorical public relations move rather than the harbinger of meaningful change,” say Lucian Bebchuk and Roberto Tallarita of the Harvard Law School in a 65-page article, “The Illusory Promise of Stakeholder Governance.” They argue that the incentives CEOs face have not changed, so their behavior won’t change. The authors also examine corporate behavior when state laws have permitted companies to protect stakeholders other than shareholders; they say they found no evidence that companies do so any more often than when they are not permitted to do so...Bebchuk and Tallarita argue more bluntly that CEOs and directors are seeking more power for themselves. “The support of corporate leaders and their advisers for stakeholderism is motivated, at least in part, by a desire to obtain insulation from hedge fund activists and institutional investors,” the authors say. “In other words, they seek to advance managerialism”—a system in which managers exercise the most power—“by putting it in stakeholderism clothing.” The BRT explicitly denies that its members want to avoid accountability.

Wednesday marks the first anniversary of the Business Roundtable’s vocal renunciation of “shareholder primacy” in a statement that claimed to “redefine the purpose of a corporation.” Like most efforts at “corporate social responsibility,” the initiative has proved long on public relations, short on action, and lacking in effect. Among the 181 CEOs who signed, Harvard Law School’s Lucian Bebchuk and Roberto Tallarita have found only one whose board of directors gave approval. On the organization’s own website, the most recent “Principles of Corporate Governance” still dates from 2016. The Business Roundtable’s CEO members sought to ensure the public that they could be trusted as benevolent leaders of the economy, but instead they have demonstrated precisely the opposite — that multinational corporations are incapable of fulfilling obligations voluntarily to anyone besides shareholders, and external constraints are needed. In fairness, the market’s competitive pressures discourage any one firm from hampering short-term profitability for the sake of corporate actual responsibility. But that is precisely where an institution like the Business Roundtable could play a valuable role, were it genuinely committed to addressing interests beyond those of the shareholders who control the firms themselves.

An article by William McConnell '22: Florida is one of the epicenters of the climate crisis already raging in the United States and, unless Florida voters do something about it, the situation will only get worse. Climate change is making hurricanes stronger. Although Palm Beach County dodged Hurricane Isaias, more hurricanes will follow, and we will not always be lucky. With stronger hurricanes and storms, flooding is now commonplace and will become even more destructive in the coming years. Soon, Florida could experience as many as 105 days with a heat index over 100 degrees. These heat waves will kill — yes, kill — seniors and destroy agriculture. And, as climate change ravages Central American and Caribbean countries, Florida will become the destination for thousands of climate refugees. These are not the predictions of alarmists. This is the consensus of scientists, the U.S. military, Florida state and federal officials, and the same companies that are at the center of America’s carbon footprint. It is clear that one presidential campaign is serious about stopping the climate crisis and the other is not. President Trump, whose campaign is funded by fossil fuel money, neither understands nor cares about the risk to Florida’s seniors and younger generations. His administration has ignored investment in clean infrastructure and disintegrated America’s global leadership in addressing the crisis. The U.S. once pressured China, India and other polluting countries to reduce their carbon emissions, but now we are silent, floundering in the backwash, as other countries shape the new green economy. But President Trump’s mistakes do not have to be our own.

Postmaster General Louis DeJoy, facing intense backlash over cost-cutting moves that Democrats, state attorneys general and civil rights groups warn could jeopardize mail-in voting, said on Tuesday that the Postal Service would suspend those operational changes until after the 2020 election. The measures, which included eliminating overtime for mail carriers, reducing post office hours and removing postal boxes, have been faulted for slowing mail delivery and criticized as an attempt to disenfranchise voters seeking to vote safely during the coronavirus pandemic. Mr. DeJoy, a major donor to President Trump who was tapped in May to run the Postal Service...said retail hours at the post office would not change, no mail processing facilities would be closed, and overtime would continue to be approved “as needed.” It was unclear, however, whether the agency would reverse measures already put in place across the country that union officials and workers say have inflicted deep damage to the Postal Service. That includes the removal of hundreds of mail-sorting machines, according to a June 17 letter sent from the Postal Service to the American Postal Workers Union. Some of those machines have already been destroyed, union officials and workers said. The announcement came as lawmakers summoned Mr. DeJoy to testify before the House and the Senate in the coming days and as two coalitions of at least 20 state attorneys general said they would file lawsuits against the Trump administration over the postal changes...The states plan to pursue their lawsuit despite Mr. DeJoy’s announcement on Tuesday. James E. Tierney, a former attorney general of Maine and a professor at Harvard Law School, said the lawsuit provided assurance to the attorneys general that the postmaster general would follow through on his promise. “The attorneys general don’t trust the word of the Postal Service,” Mr. Tierney said. “They feel more comfortable having this done in open court.”

How important is it to wear a mask at work? According to the French government, it’s very important indeed. People working in French offices and factories will, from September 1, be obliged to wear masks in all shared and enclosed spaces—unless they’re working alone. Unions had been pushing for the move, due to fears about worker safety. The timing is intended to help France keep its economy open while dealing with the September reopening of schools and the return of thousands of people who have been vacationing in other countries. Plenty of European countries now mandate masks on public transport and in shops, but it is still rare to see governments making them compulsory at work. The U.K., for one, does not seem set to follow in France’s footsteps. Health Secretary Matt Hancock said today that evidence shows most infections take place in the home, so “we are not currently considering” a workplace mask mandate...Particularly where workers are in direct contact with the public, they could start by listening to Harvard Law School’s Sharon Block and the Ford Foundation’s Rachel Korberg, who have written a wise piece for Fortune that advocates for frontline workers to be given a voice in the reopening of the economy. “Workers have a key role to play in designing and implementing new, on-the-job health practices—and even more so in the absence of enforceable federal standards,” they write. “If they aren’t able to speak up when they spot a problem, we risk prolonging this crisis, deepening the economic pain, and ultimately losing more lives.”

Think of your opening statement like it’s a movie trailer. That was the suggestion of St. Louis, Missouri Circuit Court Judge Michael Noble during a webinar focusing on openings presented jointly by the National Institute for Trial Advocacy and the Courtroom View Network Tuesday...The hour-and-a-half presentation paired archival video footage of actual openings from civil jury trials with a panel discussion between Noble, retired Boston U.S. District Judge Nancy Gertner, and Philip Freidin of Miami’s Freidin Brown moderated by Reuben Guttman of Guttman, Buschner + Brooks in Washington, D.C...While Gertner said that as a practicing lawyer, she often employed standard openings similar to Lanier’s as a way of calming herself down, neither of the Texans’ approaches would have worked in her New England courtroom. “You have to know where you are. You have to know who you are,” she said. “As a young woman lawyer, I knew I couldn’t cozy up to the jury and say ‘in my experience,’ because I had none.” ...For her part, Gertner said that she thinks lawyers should argue their cases from the beginning, but do it with the evidence. The phrase “the evidence will show” she and the other panelists agreed, can help lawyers avoid the trap of a mid-opening objection. Getting a case down to its “gist” and to its “core,” she said, involves picking the evidence that’s most favorable to your side. “That kind of selection is inevitably argument,” she said.

The National Conference of Bar Examiners has a remote proctoring requirement for states using its testing materials in October online bar exams. However, according to one of three bar exam software providers that recently pulled out of the online exam, the mandate may not be possible to carry out. Greg Sarab, the founder and chief executive officer of Extegrity, says his primary concerns about a bar exam with remote proctoring include reliable internet connections being required for live remote proctored exams, and that the requirement of simultaneous start times comes with significant technological and procedural burdens. He also says there hasn’t been sufficient development time or product testing for the technology...Bruce Schneier, a security technologist who is a fellow at Harvard University’s Berkman Klein Center for Internet and Society, says building technology for government entities is often difficult. Also, he thinks that when people discuss policy in technology, they frequently talk at each other rather than engaging in active listening to find the best solutions. “It’s not a matter of just plugging in the system and saying, ‘Go.’ It’s hard, and it needs to be thought about. To the extent it hasn’t been thought out, that’s kind of a recipe for disaster,” says Schneier. Many universities now use online proctoring for tests, but Schneier says the systems are “kind of mediocre at everything.” He’s not sure the offerings will improve much and wonders if jurisdictions may want to consider moving away from proctored remote bar exams during the pandemic, and instead, replace them with take-home tests. “How do we define success? If it’s online proctoring and cheating, and I don’t detect you cheating, it’s a success, right? This is hard,” Schneier says.

An article by Noah Feldman: President Donald Trump is pressuring Attorney General William Barr to announce the results of the ongoing Russia probe, which would violate Department of Justice guidelines designed to prevent the department from influencing elections. Of course, influencing the election is exactly what Trump wants Barr to do. Trump is once again using the unique power of the presidency to gain an unfair advantage in the 2020 election. The pattern is by now eerily familiar. It’s the same impulse manifest in Trump’s undermining of the U.S. Postal Service at just the moment it faces the responsibility of handling a surge of mail-in ballots. And it’s identical to the conduct for which Trump was impeached by the House of Representatives. Although it may seem like eons ago, it was only last December that Trump was impeached for abusing the power of the presidency to distort the 2020 election by harming the candidacy of Joe Biden. That was, the House determined, the purpose of Trump’s call to Ukrainian president Volodymyr Zelenskiy. And in Trump’s Senate trial, which ended with Republicans declining to remove him from office, the president’s supporters all but admitted to the pattern. As you’ll remember, their main defense was not that the president hadn’t used his office to try to gain an advantage, but that even if he had, the abuse of power didn’t count as an impeachable offense. The latest Barr affair is about as explicit an abuse of presidential power as you can imagine. Long-standing Department of Justice guidelines issued under the authority of the attorney general say explicitly that “politics must play no role in the decisions of federal investigators or prosecutors regarding any investigations or criminal charges.” The guidelines are implemented via a norm that the department should not make disclosures about politically sensitive investigations in the 60 days before an election.

A podcast by Noah Feldman: Dr. Sean O'Leary, a professor of pediatric infectious diseases at the University of Colorado and the vice chair of the American Academy of Pediatrics’ Committee on Infectious Diseases, discusses what factors school officials should consider when deciding whether or not to reopen schools for in-person learning.

The Radcliffe Institute’s Long 19th Amendment Project reframes the celebration by focusing on the women who would not be fully enfranchised for decades more.

An article by Sharon Block and Rachel Korberg: As the U.S. reopens despite the coronavirus continuing to ravage the country, workers across industries—from agriculture to airport security and meat processing—are getting sick. A century ago it was very common for people in the U.S. to fall ill or even die on the job. We are at risk of returning to a horrifying reality where earning a paycheck again means risking your life.  The Occupational Safety and Health Administration (OSHA), the federal government agency charged with enforcing workplace health and safety, has been missing in action during this pandemic. So what can a responsible company do to operate successfully without becoming a hotbed for COVID-19 transmission? Requiring face coverings, implementing thorough sanitation practices, and providing paid leave for all are critical, but businesses should be careful not to ignore a too-often missing element: the voices of their workers themselves. Workers have a key role to play in designing and implementing new, on-the-job health practices—and even more so in the absence of enforceable federal standards. If they aren’t able to speak up when they spot a problem, we risk prolonging this crisis, deepening the economic pain, and ultimately losing more lives. MIT research has shown that companies with empowered frontline staff who have trusting, collaborative relationships with management are better at quickly identifying challenges and developing and implementing new solutions. This makes intuitive sense—workers know better than anyone how to do their jobs best, what risks they face, and how to solve problems in the workplace.

As the coronavirus pandemic continues to wreak havoc worldwide, another looming threat remains on the back burner: the global climate crisis. Climate change has been a hot topic and polarizing issue for decades, with debates over its validity and level of seriousness more political than scientific. But the science is clear: Earth is getting hotter and its inhabitants are largely to blame. The warmer world is already provoking an increased number of extreme weather events, causing negative health impacts and obligating people to flee their homes. Experts say failure to take considerable action will have devastating consequences. What evidence do we have that the world is changing for the worse? What effects are we seeing now in 2020 and what more is predicted? Who and what are the biggest contributors? What is the status of environmental regulations and policies? What more has been proposed? Is there time to reverse concerning trends? What would be the biggest challenges? What’s at risk if we don’t? Guests: Jody Freeman, professor of law and founding director of the Environmental and Energy Law Program at Harvard University; Abrahm Lustgarten, senior environmental reporter for ProPublica; Jason Smerdon, research professor, co-director of the sustainable development undergraduate program and faculty member of the Earth Institute at Columbia University.