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By Elizabeth Pollman. When corporations publicly commit to pursuing stakeholder interests, there may be a perception that government intervention is not needed. This perception, in turn, could chill or impede efforts to obtain regulatory reforms.

The 2023 ECGI Annual Meeting brought together academic scholars and business leaders to address central questions relating to modern capitalism and corporate purpose. The three-day event at the Copenhagen Business School concluded with the Wallenberg Lecture by Professor Lucian Bebchuk on “Three Conceptions of Capitalism.” The distinguished lecture was an excellent culmination of his recent works and raised a number of interesting issues.

One of the critical points he emphasized was the potential impact of stakeholderism on government regulation. As Professor Bebchuk noted, “Acceptance of stakeholderism raises illusory hopes that corporate leaders would protect stakeholders on their own. This could substantially chill or impede efforts to obtain regulatory reforms that could produce real benefits for stakeholders.” This statement encapsulates a pivotal debate: does corporate acceptance of stakeholder interests impede or encourage government regulation of corporate externalities?

The answer is likely more complex than it might seem, and richly deserving of further inquiry.

Understanding Stakeholderism and Regulatory Efforts

In recent years, there has been a notable shift in investor and corporate thinking towards at least some measure of stakeholderism. This view posits that businesses should not solely prioritize shareholder interests but should also consider the well-being of a broader range of stakeholders, including employees, customers, communities, and the environment. Different proponents of stakeholderism have asserted this view with varying strength as to whether, and the extent to which, corporations should give stakeholder interests independent weight and be willing to make tradeoffs at the expense of shareholder interests.

The Potential Chill Factor

Professor Bebchuk’s point regarding the illusory hopes raised by stakeholderism raises a critical concern. When corporations publicly commit to pursuing stakeholder interests, there may be a perception that government intervention is not needed. This perception, in turn, could chill or impede efforts to obtain regulatory reforms. This concern might worry observers from different viewpoints who share in common a belief that government regulation of externalities is necessary and important for promoting societal interests.

In this scenario, corporate leaders may believe or at least give the appearance that their voluntary efforts to address stakeholder concerns are sufficient, thus creating a disincentive for governments to step in with more comprehensive and enforceable regulations. For instance, if a corporation widely publicizes its commitment to environmental sustainability, it might be less inclined to support stricter environmental regulations. Policymakers might see investor and corporate statements concerning a wide range of issues, from carbon emissions to worker wages, and conclude that private action is responsive.

In addition, corporate lobbying and political influence play a significant role in shaping government regulations. Companies with substantial resources often engage in lobbying efforts to sway regulatory decisions in their favor. In such a context, it’s plausible that corporations advocating for stakeholder interests could simultaneously work against stringent regulation of externalities. A corporation might, for example, publicly support environmental sustainability while using its lobbying power to resist regulations that impose costly environmental compliance measures. This dual approach can create a contradictory situation, in which corporations are ultimately working against regulatory actions that would address their externalities.

A Catalyst for Regulatory Action?

On the other hand, corporate acceptance of at least a measure of stakeholderism might create an environment in which government regulation of corporate externalities is more likely.

Stakeholderism can spotlight areas where current regulations may be lacking or ineffective. When corporations actively engage with stakeholders, valuable insights into the shortcomings of existing regulatory frameworks might come to light.

Investors, consumers, and employees, when informed and engaged, can exert pressure on corporations and governments. They can demand that companies live up to their stakeholder commitments while advocating for government regulations to help ensure consistency and accountability.

Corporations that embrace the pursuit of stakeholder interests may be more willing to collaborate with government bodies, civil society organizations, and other stakeholders to address complex issues. A shift in corporate culture and support may prompt governments to follow suit, recognizing the need to codify and enforce these principles through regulation that serves broader societal needs.

While chilling corporate externality regulation is a serious concern, the type and direction of outcomes that follow from corporations embracing stakeholder interests is not clear.


In sum, the relationship between corporate acceptance of stakeholderism and government regulation of corporate externalities is complex and multifaceted. There is a risk of stakeholderism being exploited for public relations purposes without substantive action. Corporations might engage in performative gestures that give the appearance of prioritizing stakeholder interests, while sidestepping meaningful systemic change. This could, indeed, chill the drive for robust government regulation, as it may seem that corporations are already taking adequate steps to protect stakeholders.

There is so much, however, that is not understood about the relationship between private ordering efforts and government regulation. While it is conceivable that stakeholderism could chill regulatory efforts by creating a perception that voluntary measures suffice, it is equally possible that it could drive an environment where regulation becomes more likely.

In practice, whether corporate acceptance of stakeholderism chills or fosters government regulation of corporate externalities likely depends on various factors, including the sincerity and transparency of corporate commitments, the level of public awareness and engagement, the political landscape, and the responsiveness of government bodies. Among many important issues highlighted by this year’s superb Wallenberg Lecture was the value of further studying this dynamic.


By Elizabeth Pollman, Professor of Law at the University of Pennsylvania Law School.

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This article features in the ECGI blog collection Corporate Purpose

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