By: Roza Nurgozhayeva and Dan W. Puchniak
The “corporate purpose” debate, while extremely important, has largely been built on an understanding of corporate law and governance that is local—jurisdiction bound—while the issue of climate change is global, pollution does not respect jurisdictional borders. Despite this, in practice, States, multinational corporations, and transnational organizations are increasingly using formal and informal mechanisms to shape sustainable corporate governance beyond jurisdictional borders—a colossal development that has been hiding in plain sight.
This Article develops a taxonomy for identifying and analyzing the forces driving corporate purpose beyond borders: state-based, firm-based, and organization-based “global corporate law and governance.” It demonstrates that the failure to understand these three key pillars of global corporate law and governance overlooks one of the most powerful forces driving sustainable corporate governance of our time.
Despite the enormous potential of corporate purpose beyond borders to help save our planet, this Article also illuminates the potential dark side of this watershed development. When powerful States, firms, and organizations shape the purpose of corporations beyond jurisdictional borders, a troubling new question arises: for whom is the new, ostensibly “global” purpose of the corporation being created?
The democratic accountability issue Milton Friedman identified over half a century ago, which is inherent in the classic, jurisdictionally bound corporate purpose debate, still exists in each jurisdiction. However, this Friedman-era insight is myopic to a critical feature that defines the world in which we now live: the environmental (and societal) problems that corporations and governments increasingly see as first-order issues are now global, but political structures and legal systems are primarily local. This suggests that we are merely at the beginning of history for understanding the colossal potential and enormous pitfalls of corporate purpose beyond borders.