This year, each of the major index fund managers, the Business Roundtable, the British Academy, the UK Financial Reporting Council, the World Economic Forum and a number of other organizations (both governmental and nongovernmental) announced that they did not support shareholder primacy and do support sustainable long-term investment and considering ESG matters. However, the initial reaction of the Council of Institutional Investors in denouncing the BRT position from both an economic and legal standpoint, although quickly moderated, has continued to echo in Wall Street trading rooms, at activist hedge funds and in corporate boardrooms. I continue to hear that the shareholders own the corporation and therefore can order the directors to maximize value solely for the shareholders. I also continue to hear that since the shareholders elect the directors, the directors have a primary fiduciary duty to the shareholders. Lastly, I continue to hear from some quarters of academia that economic theory and financial statistics “prove” that shareholder primacy and its concomitant short-termism best serve the economy and are critical elements of capitalism.

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