The New Corporate Law

Corporate social responsibility is back on the corporate law reform agenda. From an Australian perspective, the evidence for this is found in the simultaneous but separate inquiries that, at the time of writing this paper, are being conducted into this topic by the Australian Parliament's Joint Committee on Corporations and Financial Services, and by the Australian Government's Corporations and Markets Advisory Committee (CAMAC). These developments are supported by the many standards, guidelines, principles, and codes promulgated by non-government bodies, industry groups and other international organisations. Cynics might dismiss these developments as part of a regular cycle of corporate law reform. After all, as we will see, this is not the first time that corporate social responsibility has appeared on the reform agenda. Others might suggest that, finally, this is an idea whose time has come. The purpose of this paper is to examine the extent to which this renewed, and widespread, attention to corporate social responsibility is being reflected in the substance of our systems of corporate law. Is it possible, and meaningful, to talk of a 'new corporate law' in which the concerns of people other than shareholders (or, indeed, the non-financial concerns of shareholders) are to be given serious attention?The plan of the paper is as follows. We begin with a brief survey of recent developments in different common law jurisdictions, with an emphasis on Australia, that have implications for the idea of corporate social responsibility. The focus here is not just on statutory developments, but also on the wider array of codes, guidelines and so on that were adverted to earlier. From this base, we then draw and elaborate upon two conclusions. The first is that the shareholder primacy model continues to exert a powerful, although sometimes misunderstood, effect on the capacity of legislators to respond to corporate social responsibility concerns. In particular, it has the potential to constrain the actions of directors in responding to those concerns, it constrains the power of shareholders to put these concerns in front of the board, and it constrains the capacity of non-shareholders to bring these concerns to the attention of company managers. The second conclusion is that much of the action regarding corporate social responsibility therefore occurs outside the parameters of the statutes, and it is in this sense that we can talk about a 'new corporate law': a system of corporate regulation that depends as much on (if not more on) non-statutory mechanisms and methods, which in many cases can have a more immediate impact on corporate operations. The final part of the paper examines some of these themes in more detail, by way of a 'case study' of the position of corporate employees. Whatever definition one takes of corporate social responsibility, it is undeniable that the financial and physical well-being of a company's employees must be a central concern. Recent corporate collapses and policy responses to them in Australia provide a stark illustration of the limited extent to which corporate law has been able to respond to the challenges of corporate social responsibility.