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ANALYSIS: ESG Concerns Molding Shareholder Primacy

Sept. 29, 2022, 9:00 AM

In recent years, Business Roundtable (BRT) commitments and public benefit corporation (PBC) conversions have led to speculation that shareholder primacy would soon be replaced with increased stakeholder consideration.

Although those speculations didn’t fully materialize, shareholder proposals that incorporate shareholder primacy as well as ESG issues are revealing the cracks in the status quo. Shareholders have recently introduced proposals targeting specific ESG initiatives and referencing the compatability of stakeholder interests and long-term shareholder value maximization.

Shareholder Primacy v. ESG

Companies aren’t explicitly excluded from considering stakeholder or ESG interests, but Delaware courts have determined that directors have a fiduciary duty to ...