Monday, January 21, 2008

Sensitive Souls

Back in 1614, some bewigged English judge made this quotable statement: “None can create souls but God. But a corporation is created by the king; therefore a corporation can have no soul.”

Poor Nordson Corporation may be crushed to hear this. Its proxy statement, filed Friday, contains an unusual (and un-required) section entitled “Corporate Philosophy,” in which it sounds quite soulful:

We strive to be a vital, self-renewing, worldwide organization which, within the framework of ethical behavior and enlightened citizenship, grows and produces wealth for our customers, employees, long-term shareholders and communities…We operate for the purpose of creating balanced, long-term benefits for all of our constituencies: customers, employees, long-term shareholders and communities.”

Hey, not so fast there. Citizenship? Constituencies? Do you know the law does not necessarily like it when you morph into the corporate version of Sensitive Guy?

Yes, though this may surprise some people (gosh, I hope it does, or why bother blogging) the issue here isn’t just a moral one, i.e., whether corporations should be sensitive to the needs of “stakeholders” other than their shareholders. It's also a legal one - how much does American corporate law actually allow that kind of sensitivity, and should we reform the law to encourage more of it? As a law professor said last year in a widely discussed article on corporate social responsibility, “the current debate within corporate law is as fundamental as [at] any time since the New Deal.”

Speaking of the New Deal, today’s Wall Street Journal paraphrases two economists who think the incoming recession may be “at least as bad as the five most catastrophic financial crises to hit industrialized countries since World War II.” At least. If times get hard, corporate social responsibility may become an unaffordable luxury on the one hand, or an imperative on the other. Either way, we won't have patience for debates among wig-wearing jurists about the existence or nonexistence of corporate souls, but even in a recession, certain soulless, wig-related sectors of the economy will no doubt keep chugging along.