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Boston University Law Review

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In 2019, the Business Roundtable announced its commitment to all corporate stakeholders—consumers, employees, suppliers, and communities—and not just shareholders. This announcement has reawakened an old debate over corporate social responsibility. Stakeholderism advocates argue that corporate leaders must consider the interests of the various stakeholders impacted by corporate decision-making. Stakeholderism critics challenge this view, expressing concerns that stakeholderism will magnify managerial agency costs, chill regulation, risk inauthenticity, and lead to impractical solutions.

This Article proposes “contractual stakeholderism” to operationalize stakeholderism in accordance with the views of its advocates but in a way that is attentive to the concerns of its critics. Normatively, it advocates for a shift from a benefits-based approach to stakeholderism to one focused on harms prevention. The former often justifies stakeholderism by highlighting benefits that stakeholder protection can offer the corporation, including advancing shareholder value. But this basis for stakeholderism will fall short because what is good for the stakeholder is not always good for the shareholder; instead, sometimes their interests conflict. In these situations, the benefits-based approach will inevitably lead to the prioritization of the shareholder over the stakeholder. To address this shortcoming, this Article advocates for a harms- based approach that focuses on the risks that a corporation’s activities create for stakeholders. This approach applies to a wider range of corporate activity and protects a broader range of stakeholders than does the benefits-based approach. This Article justifies the normative shift to a harms-based approach by identifying five dimensions of inequality that place stakeholders at unique risk of harm from corporate conduct: notice, choice, risk management, legal remedies, and the fruits of exchange. Practically, this Article explains that many stakeholder harms arise from the contracting choices that corporate actors negotiate, draft, and bind their companies to perform. A harms-based approach would require corporate actors to design these contracts differently to mitigate or eliminate risks to stakeholders. To incentivize such contract design, this Article concludes by proposing the following tort duty: Corporations, as contracting parties, must take into account stakeholders’ interests when performance of the contract creates a risk of harm to them.



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