The Wake Forest Law Review’s 2011 Business Law Symposium brought together legal scholars and policy leaders who offer a range of perspectives on “The Sustainable Corporation.” How do business firms contribute to – or undermine – the ability of social, ecological and environmental systems to endure? The question raises issues concerning community development, corporate governance, energy policy, environmental law, institutional shareholders, labor relations, business transparency, nonprofits, and securities markets. The business community is actively engaged in understanding the practical challenges of sustainability. This Symposium seeks to create greater awareness of the legal challenges to the corporation becoming an instrument of sustainability.



Professor Alan Palmiter – Wake Forest University School of Law

“Opening Remarks”




Professor Dana Brakman Reiser – Brooklyn Law School

“Benefit Corporations? Evaluating Another Hybrid Model for Social Enterprise”

The paper will discuss the new “benefit corporation” concept being pioneered in Maryland and Vermont, and on which several other states are likely to take action in the coming year. This “benefit corporation” is another new hybrid form of organization, created to house socially-minded businesses. Unlike the L3C model, which works on a limited liability company framework, benefit corporations are corporate models. Distinct from traditional business corporations, however, benefit corporations must pursue “a general public benefit” and must require directors to consider constituencies other than shareholders in making decisions. Intriguingly, all of this vetted by independent, third party standard-setting organizations rather than by state government officials. This article will explain the benefit corporation form, compare it with other traditional and hybrid forms available to social enterprises, and evaluate the advantages and disadvantages of privatizing inquiries into public benefit.

Professor Wendy Wagner – University of Texas School of Law

“Viewing Corporate Sustainability Disclosures as a Public Good rather than a Corporate Bad”

Virtually all of the efforts to coax corporations on a more sustainable path, including the growing use of sustainability disclosures, are understood as efforts to redress negative externalities. Firms must produce disclosures and analyses of the sustainability of their production life cycle, it is believed, because the firms are the ones generating the pollution and other unsustainable practices.

In this paper I argue that this conventional framing of corporate sustainability disclosures as needed to redress negative externalities may have the problem backwards, at least with respect to the creation of rigorous sustainability analyses, like life cycle analyses. Instead, disclosures and internal analyses related to corporate sustainability may be much closer to a public good as opposed to part of a firm’s responsibility to redress a negative externality, or a corporate bad. Since life cycle analyses are done to allow cross-comparisons between firms, identify areas for possible productive synergies with other firms, and highlight areas of corporate activities in need of greater regulatory oversight and direction, for example, there are clear public good qualities associated with them. Moreover and in contrast to other information disclosures (like TRI or SEC requirements), life cycle analysis in particular can be quite costly for an individual firm to collect and analyze. Firms also enjoy fewer advantages in producing these analyses since sustainability analyses such as life cycle analysis involve less internally held information (as contrasted to emissions inventories) and demand a higher level of engineering expertise than is the case for other environmental disclosures. While the resulting life cycle analyses may reveal ways that firms are adversely impacting the environment, the cutting edge nature of the analyses, coupled with the synergies across firms from the resulting information cause the public good characteristics of these disclosures to rival and even exceed the corporate bad qualities.

Perhaps more important, the primary payoff from conceptualizing of corporate sustainability disclosures, like life cycle analyses, as public goods rather than as corporate bads cause primary responsibility for their development to shift from individual firms to the government. In fact, when these life cycle analyses are produced in the first instance by expert regulators, many of the problems that have thwarted their success (e.g., rigor, reliability, accessibility) are largely bypassed. Consumers, investors, insurers, regulators, and the firm itself will have a more reliable and timely basis for assessing firm sustainability. This rigorous, agency-prepared baseline can then help jumpstart both market and regulatory solutions to advance corporate sustainability in the future.

Professor Matthew T. Bodie – Saint Louis University School of Law

“NASCAR Green: A Case Study of Sustainability and the Nature of the Firm”

What is the role of the firm in the sustainability literature? This symposium contribution seeks to explore the issue by looking at the sustainability efforts of NASCAR and its affiliated firms. NASCAR has undertaken significant environmental sustainability initiatives, particularly the promotion of alternative fuels. These sustainability efforts are facilitated, in part, by the unusual structure of NASCAR and the sport of stock-car racing. By focusing on the corporate structure of NASCAR and its affiliated entities, this article seeks to complicate the traditional sustainability narrative. Because both supporters and critics of sustainability theory assume a publicly held corporation in a wide-open industry, they have missed opportunities to explore why a “firm” should or should not care about sustainability efforts within its own internal culture or within its industry as a whole.

Professor Steve Ferrey – Suffolk University Law School

“Sustainable Corporations and Energy”

“Sustainable” corporations are now the buzz of the new corporate ethic. However, this term is poorly defined, and even less well understood. What is a sustainable corporation in terms of its energy use? This article will examine different U.S. and European definitions of the ‘sustainable’ corporation, and definitions of government and private entities. We will focus on the new 21st century era of climate control pressure on corporate emissions, and the meta-value of carbon. How is this new carbon and energy use metric being evaluated? What is the transcendent importance of energy? To get at this question, this article will examine the role of renewable energy in the corporation’s future. It will look in detail at incentives and impediments. This will include an examination of the federal scheme of federal tax credits, stimulus funding, and special capital depreciation rules. The article will also look at the legal impediments and incentives surrounding a variety of state incentives, now that federal energy legislation is stalled:

  • Renewable Portfolio Standards
  • Net metering of corporate power
  • Feed-in Tariffs
  • Discriminatory state incentives
  • Distributed, on-site generation
  • Energy efficiency
  • Demand-side management of power
  • Building efficiency requirements and opportunities

The article will then shift to transportation energy use by corporations, highlighting several innovations options undertaken by corporations to be sustainable. In this sense, it will look at both direct on-site use of energy by the corporation, as well as more indirect use in terms of transportation.

Professor Brett McDonnell – University of Minnesota Law School

“Strategies for an Employee Role in Corporate Governance”

One way to make U.S. corporations more sustainable is to broaden the group of stakeholders whose interests are considered in making decisions. One of the most important groups of stakeholders is corporate employees, both because their own stake is critical to their well-being and because employees may often be more likely to value the interests of other stakeholders more than corporate shareholders or managers do. Yet, U.S. corporate law does little or nothing to encourage any role for employees in corporate governance. U.S. law focuses on just two or three groups within the corporation: shareholders, directors, and managers (to the extent that the last two groups are separate). This essay evaluates a number of possible strategies for creating a role for employees in corporate governance. The strategies include:

  • Use other areas of the law to protect employees;
  • Encourage managerial or director power, on the theory that managers and/or directors will side with employees and other interests more than shareholders;
  • Encourage shareholder power, on the theory that employees agree on the need to keep managers accountable;
  • Support unions as a source of countervailing power;
  • Promote means for directly giving employees a voice within corporations, e.g. through employee representation on the board, employee councils, non-binding employee votes on particular matters, employee surveys, or similar means; and
  • Promote other legal forms of business associations in which employees can play a greater role.

The essay suggests a variety of criteria that should be used in evaluating these strategies. One must balance the probability of success of a strategy (i.e. its political feasibility) with the net benefits it would achieve if successful. The benefits and costs of each strategy must include effects both on the internal efficiency of corporations, the fairness of resulting outcomes, and implications for the balance of political power. One must also balance short-term and long-term effects of the differing strategies. The essay concludes by applying these criteria to the six listed strategies, and suggesting a mix of strategies that appears most attractive at this point. In that mix, a leading short-run strategy is siding with shareholders over managers and directors in current power struggles (since union and public employee pension funds are leading shareholder activists), while for the long-run developing alternative legal forms should be a leading strategy.

Professor David Millon – Washington & Lee University School of Law

“Two Models of Corporate Social Responsibility”

This paper presents two ways of thinking about corporate social responsibility (CSR), one familiar, the other less so. The first model conceives of CSR in latitudinal terms, emphasizing the broad range of interests that corporate activity is supposed to serve and the diverse considerations that ought to motivate corporate management. According to this view, corporations should be operated with due regard for all of their various stakeholders, not just shareholders but also employees, consumers, creditors, and members of the general public affected by corporate activity. One example of this approach is the so-called constituency statutes adopted by over 30 states. These statutes typically authorize decisionmaking that takes into consideration the interests of a wide range of enumerated corporate constituencies. As such, this model rejects the shareholder primacy view that corporations should be managed primarily for the benefit of their shareholders.

The second model is longitudinal in orientation and focuses on the corporation’s sustainability. Here the emphasis is not necessarily on mediating the conflicting interests of particular constituencies but instead on the long-term success of the corporation as a whole. This requires cultivation of viable relationships with those who contribute to production, attention to the effects of the corporation’s activities on society, including management of environmental and social costs, and a long-term conception of shareholder value. The longitudinal perspective thus has the potential to address many of the concerns that motivate CSR advocates.

This paper will illuminate the contrasts between these models and assess their prospects in light of law, economics, and business practice.

Professor David Yosifon – Santa Clara Law

“Towards a Firm Based Theory of Consumption”

In his groundbreaking 1937 essay “The Theory of the Firm,” Ronald Coase explained that production is sometimes organized through arms-length contractual exchange “in the market” and at other times is organized through command and control “in the firm.” Coase showed that production is based within the firm where the costs of determining prices for various inputs exceeds the gains that are witnessed when markets, rather than fiat, determines the allocation of resources. Coase’s theory has had tremendous influence in economics generally and in corporate law scholarship in particular. What is missing in Coase’s theory of the firm, however, is any conceptualization of consumption activity.

Contemporary “nexus of contracts” models of the corporation presuppose, typically without elaboration, that consumers are part of the “nexus,” along with investors, workers, and communities. This article will begin to integrate “consumption” into Coase’s theory of the firm by showing that much like with production, consumption sometimes is organized through spot arms-lengths transactions “in the market,” where prices are easily obtained, but that consumption also is sometimes organized at least in-part “in the firm,” when prices are difficult to obtain, or where fiat can substantially lower the transactions cost involved in consumption. A quintessential example of firm-based consumption would be employee “fringe” benefits, but there are many such forms of consumption that are entirely divorced from the employee relationship.

The present article will focus in particular on the ways in which consumer preferences for “sustainable” consumption are sometimes managed “in-house,” within the firm, rather than through spot transactions in the market. This work will build on my recent scholarship which has endeavored to flesh out a more sophisticated conception of the consumer as part of the “corporate nexus” than is otherwise available in corporate law scholarship.

Professor Judd Sneirson – Hofstra University School of Law

“The Sustainable Corporation and Shareholder Profits”

What is a sustainable corporation and why aren’t there more of them? This paper argues that corporate law’s traditional focus on shareholder profits stifles sustainability efforts inasmuch as sustainable corporations take a broader view of the firm and its goals. The paper also weighs alternatives for increasing sustainable corporations’ numbers and encouraging corporations of all stripes to act more sustainably. These include imposing sustainability on corporations, requiring sustainability disclosures, and raising awareness that sustainable business practices fully comport with corporate laws and even typically enhance long-term firm value for all of a corporation’s stakeholders.

Professor José Gabilondo – Florida International University College of Law

“Understanding Corporate Leverage Cycles: Can the Dodd-Frank Act Reduce Financial Instability?”

In response to the financial crisis that began in August 2007, Congress recently enacted the Dodd-Frank Act (‘Act’), an ambitious set of financial market reforms that changes the landscape for corporate funding. The Act aspires to reduce financial instability by reducing and managing the risks of excessive borrowing by companies, including financial firms. I apply economist Hyman Minsky’s axioms about leverage markets to analyze whether the Act can meaningfully mitigate the patterns of financial instability that led to the last credit market break.

Professor Faith Stevelman – New York Law School

Ruggie 2010: New Mechanisms and “Remedies” for Corporate Human Rights Abuses

In the past decade, the United Nations has taken a more intensive interest in the relationship between multinationals and human rights. Traditionally, states have been the focus of such inquiries, but as multinationals have become adept at transcending national governments’ regulatory powers, and as multinationals often profit from projects in nations which have weak rule of law, the corporation itself is increasingly becoming a locus of international human rights expectations. The 2010 Report from John Ruggie (the Special Representative to the Secretary General on the Business and Human Rights) takes the “Protect-Respect-Remedy” framework outlined in conceptual detail in the 2008 Report, and seeks to “operationalize” it through an examination of potential sites of enforcement. This step is crucial, of course, because resort to traditional courts is often impractical for persons claiming rights abuses. Whether it’s a matter of private plaintiffs’ litigation and travel costs, or procedural hurdles like jurisdiction or forum non conveniens, or evidentiary problems, traditional civil litigation is a suboptimal structure for managing multinationals’ shortfalls in the human rights arena. After a brief look at the problems associated with traditional litigation, this paper surveys and critiques the 2010 Report’s proposals for expanding the forms and nature of remediation in the business and human rights area. It then examines issues of remedies and deterrence from the perspective of corporate governance. In particular, it argues that traditional corporate law makes it difficult to pinpoint responsibility for human rights compliance (on the part of individual corporate agents or the corporation as an entity). Such blurring of personal responsibility, as effectuated by traditional corporate law concepts, is itself a challenge to be addressed in the construction of remedial structures.

Professor Beate Sjåfjell – University of Oslo (Norway)

Regulating Companies as if the World Matters: Reflections from the ongoing Sustainable Companies project

Climate change is a case in point for the necessity of working towards a sustainable development, i.e. achieving economic development and social justice within the non-negotiable ecological limits of our planet. While we have little hope of achieving the overarching societal goal of a sustainable development without the contribution of companies, the contribution of companies is restricted by a number of barriers, notably that of shareholder primacy and the perceived overarching goal of maximising shareholder profit. Clearly, voluntary CSR is not sufficient. This paper therefore argues that the law is necessary to ensure the contribution of companies, to level the playing field for companies that wish to actively contribute to the mitigation of climate change, and to ensure that their contribution is not limited by the competitive advantage that today’s system tends to give irresponsible and short-sighted companies.

The question is: what area of the law? The limits of external regulation, notable environmental law, are well-documented and consist of a number of interlinked factors, of which the paper gives an overview. The paper makes the argument that company law is a necessary tool for achieving sustainable companies, both to make more effective the external regulation of companies and to realise the potential within each company to make its own independent, creative and active contribution to the mitigation of climate change.

The paper goes on to give the tentative results of a cross-jurisdictional analysis of the possibilities and barriers in company law in a number of jurisdictions, based on mapping papers from the project team of the research project Sustainable Companies. Based on these tentative results, the paper concludes with some reflections on possible company law reform as a way forward. As does the research project, this paper focuses on mitigation of climate change as a specific case. Climate change provides a powerful example to illustrate broader challenges in promoting corporate environmental responsibility through company law reform. In other words, if it is possible to induce a company to act more responsibly on climate change issues, then presumably it would extend its heightened environmental awareness and commitment to other environmental issues. Focusing on climate change can provide a catalyst for wider corporate engagement with the environment and also have a positive knock-on effect as regards the social dimension of sustainable development.

Professor Kent Greenfield – Boston College 

The Puzzle of Short-termism


8:45 – 9:00 Opening Remarks
9:00 – 9:15 Overview
9:15 – 10:30 Morning Session 1
10:30 – 10:45 Break
10:45 – 12:00 Morning Session 2
12:00 – 1:15 Lunch (by invitation)
1:15 – 2:30 Afternoon Session 1
2:30 – 2:45 Break
2:45 – 4:00 Afternoon Session 2
4:00 – 4:05 Closing Remarks

*Participants will speak for 25 minutes each during their respective session. Each participant will present their paper for 15 minutes to be followed by 10 minutes of question and answer.