Should corporations act as socially responsible institutions? Deborah Burand, professor of clinical law and director of the Grunin Center for Law and Social Entrepreneurship, and George T. Lowy Professor of Law Marcel Kahan have opposing views on the subject. On September 25, Burand and Kahan brought their divergent perspectives to the debut of a new discussion series at NYU Law, Respectfully Dissent: A Series On Agreeable Disagreement.
Moderated by Jeanne Fromer, vice dean of intellectual life and Walter J. Derenberg Professor of Intellectual Property Law, Respectfully Dissent seeks to encourage civil dialogue at a time when many subjects, from politics to sports, fall prey to a hostile, no-holds-barred public discourse.
“In recent years, having respectful and empathetic conversations across disagreement has seemed increasingly difficult,” says Fromer. “We launched Respectfully Dissent to showcase for law students that their own law professors have important disagreements about hot-button policy and legal issues. But we can discuss those disagreements respectfully, and productively, and walk away as friends who have learned from one another.”
At the inaugural event, Burand and Kahan offered contrasting views on whether corporations should be compelled—and by whom—to prioritize social and environmental concerns alongside the pursuit of profits. Burand said she believes that experimental economic models, such as stakeholder capitalism—in which a business operates while considering the interests of other parties such as employees, consumers, supply chain entities, and the community-at-large—are worth exploring.
“[There is a] power system that basically says [that corporations are] set up to make sure that shareholders always win and other constituents are of secondary importance, if that. I think that’s the way the world is. I don’t think that’s the way it has to be,” she said.
Kahan agreed that business leaders should be mindful of their company’s impact on society, but he expressed skepticism that most companies would ever venture beyond the status quo of focusing on its own self-interest. “A corporation [can say] ‘We care about two things: profits and the environment—so we will sacrifice profits for the sake of the environment up to some level or up to the level that the board of directors decide,’” he says. “But we don’t see a lot of that happening. Now are we going to see more of it happening in the future? My bet is yes. Is that going to become a predominant way, or will these corporations account for 10 percent of the capitalization of publicly traded corporations in the United States by the year 2050? My prediction is no.”
In making her case for greater corporate social responsibility, Burand reflected on the history of her hometown, Anderson, Indiana, where at one time General Motors employed about 25,000 people. “Well, in 1980, when I graduated from college, that story changed abruptly and GM shuttered all 20 of the plants,” Burand said. “At that point, Anderson had the highest unemployment in the nation.” The city remains plagued by crime, poverty, and drug abuse, she added. “Now can I blame General Motors for all of these woes today?” Burand asked. “No, but the way it departed with so little regard for its employees in the community that hosted it for decades clearly kicked off a decline from which my hometown has yet to recover.”
Expecting corporations play a larger role in rectifying societal ills would be misguided, Kahan insisted. “[A] lot of people are looking to corporations to solve the problems of society that we do not seem to be able to solve in other ways,” he says. “Corporations are not going to be effective in doing that. We need to solve the problems that we have through legislation and through regulation. And the reason why we are not able to adopt the legislation and the regulation is because we in America do not necessarily have a consensus on how the problems should be solved.”
While noting that business and public sector interests rarely align, Burand called for reforms in the corporate world to help close the gap. One option, she explained, could be so-called benefit corporations—for-profit institutions that have a stated aim of positively impacting society. No single solution will do the job, she said: “It’s the aggregation of using all the tools that are available and not throwing our hands up and saying, ‘Oh my gosh. It’s a mess.’”
But effecting change for a better society, Kahan countered, should come from the public itself—provided that it exercises power at the polls and with retailers. “The real change will happen if we pass laws and regulations that force companies to do what we want them to do, or if we make it profitable for corporations to do that,” he said. “If you want corporations to behave in a socially responsible manner, don’t buy products from [them].”
In the end, both found common ground in one of Burand’s concluding remarks, “Corporations are part of our society,” she said, “and they are shaping some of these legislative initiatives for good or for ill in their interest.....[I]t matters to me how corporations have power and who controls the corporations.”
Respectfully Dissent will feature two discussions each semester. The next event—focused on judicial review and titled “Congress versus Courts: Who Should be Supreme?”—is scheduled for October 30.
Posted October 16, 2024
Watch the full video of the conversation: