ESG, corporate piracy and Coasian contracting efficiency

Abstract

Environmental, Social and Governance activism entails a subtle form of corporate piracy. It manifests in opportunistic backdoor attempts to convert firms that were incorporated to advance shareholders' pecuniary interests into firms that sacrifice pecuniary benefits to advance a social/political agenda favoured by a subset of activist shareholders. These surreptitious property rights encroachments raise an important issue: How should governance architecture (laws and charters) be structured and enforced to deal with shareholder disagreements and the resource dissipation (losses) that results therefrom? I address this issue using basic contracting efficiency principles of property rights economics traceable to Coase and to Alchian and Demsetz.