A corporation is the creature of the state. There is no such thing as corporate Common Law. Each of the earliest corporations was literally created by specific statute, a condition which has been diluted over the last four centuries. The original social contract that made creation of corporations attractive was explicit: what business, what term, what invested capital. These corporations were created to serve human interests and they were tied inextricably to the interests of society.
A True Tale About the True Cost of Coal
When was the last time that there was so much buzz about coal. First, there was news that Stanford, one of the major university endowments in the country, was divesting from coal. More recently, the EPA announced new regulations on coal emissions. Both are very big and very interesting announcements. However, coal is entrenched in our utility grid and coal provides 50% of electricity in the United States and even 100% in some states. Divestment & even the new regulations won’t solve our problems with fossil fuels but there is a solution – Integrated Reporting.
An Outsider's History of Harvard & Responsible Investment: 1970-2014
In an effort to make sense of Harvard's investment practices and (apparent) unwillingness to be a leader in responsible investing, I have spent the past weeks looking at the history. This forty-some-odd year span correspondes with my work in corporate governace so it seemed a good and handy timeframe for investigation. Copies have been sent to various contacts at Harvard but I hope you'll read it and comment. Feel free to share it because the issues apply all university and charitable endowments. An Outsider's History of Harvard & Responsible Investment: 1970-2014.
Board Oversight of Sustainability
There’s a lot of talk about sustainability in the business world these days but what does that mean and who makes decisions about sustainability? I have a new piece in the Corporate Governance Bulletin on just this issue. We found that, “relatively few firms indicate that directors are asked to evaluate the risks and opportunities posed to the business by sustainability issues.” That means either these issues are getting short shrift or they’re being addressed by management without board input.
The new book — Trusting Harvard
Trusting Harvard: The Cost of Unprincipled Investing
New from Robert A.G. Monks and Marcy Murninghan, a book that addresses the gap between scholarhsip and university investing.
Obamacare — the question we really should be asking
I remember how difficult it was to pass Medicare back in the sixties (see also). Now many consider this a basic government service meeting the needs of hundreds of thousands of citizens. The fact that Obama got any kind of healthcare billed passed when Lyndon Johnson couldn’t, Jack Kennedy couldn’t and Bill Clinton couldn’t is really something. Hillary Clinton put together a task force of the smartest people in the world and they got nowhere but Obama got something done. That, in itself, is an accomplishment.
There’s a troubling aspect to the Affordable Care Act that no one seems to be talking about (aside from the fact that some people think the ACA and Obamacare are two different things…). We have a habit in this country of assuming the profit-making entities can deliver a service better than the government and it’s become something of a religion in the last few decades. The idea, I suppose, is that you’re going to get a more efficient process if it’s done through the private sector. Maybe some think that it’s even going to save money. But, you have to consider the profit-making factor and the desire for profit never goes down. It never even really levels off. Both the consumer and the government are held hostage to corporations that want to make more and more money for providing basic, necessary services. In fact, privatization and government contracts take market forces out of the equation when a mandated government service is provided by corporations.
Just look at the deals states are cutting with for-profit prisons – guaranteed occupancy levels. That means they’re promising to pay for services even if crime levels go down and we have fewer prisoners. Not much incentive to cut crime there. So, the question we really should be asking is: just how will this play out in Obamacare?
Instead, the discussion – if you want to call it a discussion – is about how the badly the ACA launch has done. That’s news and boy do the anti-government types love it. To them, it’s proof-positive that government can’t work. But let’s be fair: these things almost never work right out of the box. Could they have done a bit more testing of the software – yes, and it’s hard to believe that with all of the computer expertise in this country they couldn’t have gotten some advice on this. Still, do the initial glitches mean that the ACA is a complete bust? No. So let’s hope we can get beyond these surface issues and address the real potential problems of corporations providing government-mandated services.
Who picks up the tab when a corporation is fined?
Government Shutdown as Protest
On Global Reach Radio Today
Tune in (online) this afternoon at 2p.m. Eastern. I'll join Te Revesz on Global Reach along with Bruce Freed of the Center for Political Accountability and Charles Kolb. We'll be talking about runaway corporate power in Washington and how we can fix it.
The Wall Between Mission and Endowment
For the Public Good? Nonprofits & Political Donations
Not Fade Away: We Must Revive Fiduciary Duty
A few years ago we recorded this post about fiduciary duty. I still had the misguided hope that President Obama would address corporate capture, conflict of interest and fiduciary duty. While it's clear that these issues are not on his agenda, they are still very much essential for corporate governance and shareholder activists. Shareholders — big and small – must define what they want from their corporations and push for it. I've just posted about this today over at CSRwire:
Remember when you’d put Silly Putty on the Sunday color comics and the image would be transferred to the Silly Putty? Then you’d stretch it and re-stretch it to distort the image until finally it was no longer recognizable. That is where we are with fiduciary duty.
More to come on this issue in the coming weeks. Stay tuned…
Let’s Take Constitution Day Seriously
While wages, opportunities and any real voice in government for most Americans shrink, Wall Street gets taxpayer bail-outs, special low tax rates, and obstruction of significant reform. Fossil fuel corporations get billions in tax subsidies, military protection around the globe, and escape accountability for climate catastrophe. Congress passes what many call the “Monsanto Protection Act” to exempt decisions about genetically modified crops from judicial review, and the United States remains one of the only democracies on the planet that fails to label GMO food. The firearms industry gets a free pass from any responsibility for the 30,000 Americans who die every year from guns.