Henry Thornton’s Dr Shann Turnbull turns his attention to Corporate Social Responsibility and offers a solution to the problem of excessive regulation strangling capitalism:

Because the survival and success of corporations is dependent upon strategic stakeholders it is very much in the interest of shareholders to have them recognized and bonded to the corporation independently of the directors. To protect and promote the interest of stakeholders, and the independence of their advice for the directors, the processes of establishing stakeholder councils would best be established through enabling provisions in the corporate constitution. Likewise the processes for establishing a shareholder committee established to mediate director conflicts of interest and the extent of discretionary public disclosure would also need to be set out in the corporate constitution or its by-laws.

In these ways corporations could enhance their ability to protect and further shareholder value as well as their social responsibilities while reducing the extent of their discretionary disclosure. The government and its regulators could then in turn relax a number of mandatory disclosure and auditing requirements for corporations who adopted constitutions that introduced shareholders and stakeholders as co-regulators. Provided directors resolved any problems raised in private discussions with representatives of shareholders and stakeholders the need for public disclosure on many matters could be avoided. After all the purpose of having corporate law, regulators, standards and codes are to protect shareholders and stakeholders. The objective should be to protect and nurture their interests so disclosure is not required.

Read the full article here. (Comments and debate on this important issue are welcomed – email Henry at henry.thornton@henrythornton.com). Henry’s take is linked here.