From Marty Lipton — given his past support for using non-financial measures to insulate executives from accountability, we are skeptical. Nevertheless, nice to hear.

Corporations that adopt stakeholder and ESG principles, with the implicit agreement of their shareholders achieved through active communication and engagement, will be best positioned to achieve sustainable growth over the long term. The objective is not to maximize the near-term stock price of the corporation; instead, as we have elsewhere noted, the purpose of the corporation is to achieve and conduct a lawful, ethical, profitable and sustainable business in order to create value over the long term. This does not just permit but rather requires consideration of all the stakeholders that are critical to the corporation’s success (shareholders, employees, customers, suppliers, creditors and communities). The task of identifying stakeholders, and mediating amongst them, properly rests with boards of directors acting on their informed business judgment. Shareholders are essential partners in the corporation’s pursuit of this mission, and regular engagement between investors and directors is another necessary element of effective stakeholder-oriented governance. Corporate action and decision-making, taken against the backdrop of this view of corporate purpose, will be fully protected by the business judgment rule, so long as it reflects the decisions of unconflicted directors acting upon careful deliberation. While the investigation, information, issues and the stakes are different, the process is not different from that which, for the past 35 years, has been routinely followed by corporate management and boards of directors in considering major investments, the appetite for risk and its management, the ethical “tone at the top,” changes in business strategy, or a merger or sale of the corporation: careful consideration and documentation of management’s recommendation and the advice and opinion of expert consultants.

A Framework for Management and Board of Directors Consideration of ESG and Stakeholder Governance