In a previous post, we considered the problems of ensuring companies do the right thing – socially, environmentally, and economically. I suggested the adoption of a Shareholder Statement of Interests as a tool for conscientious owners to express their aims, and to provide a ‘job description’ for the company as a whole.
But why should the rest of us think this especially important for companies?
Well, a company is an artificial creation, a ‘person’ in the eyes of the law. True, a company cannot vote. But it has other powers that far exceed those of natural persons. Mostly, this is due to the fact that the company is an ‘umbrella identity’, under which many natural persons – people like you and I – can gather their resources and have them directed to certain purposes. It’s that ability to gather and direct, to enter into and perform legal obligations, to contract and transact, that makes a company an extremely powerful entity.
The greater the gathering of wealth, the greater the power. If we add to that the expertise of professional management and professional marketers, we can quickly understand how some mega-companies gain power and wealth to rival or even exceed that of many national governments.
You and I, as natural persons, have limitations. We learn and grow, mostly by making mistakes – whether small or great. We miss some opportunities, squander others, and a great many simply escape our attention. And the thing is, no matter how incompetent or foolish, we can’t fire our management! We’re a natural person, stuck with who we are. It’s one of the things that keeps us all more or less, as individuals, roughly equivalent.
But companies are not like this. They can import the best brains – the best of our experience and natural talents – to run themselves. They can concentrate and amplify the talents we natural people have. And they’re a legal person, with an identity that doesn’t inevitably die, get frail, or even have to sleep!
The point is that there’s a large imbalance of power between natural and legal people. And, as we all know, power can be used for both good and bad purposes. Shouldn’t we therefore want to know what purposes a company has, before we add to (or even just support) its power through employment, or investment, or purchasing its products? Shouldn’t we, the natural people, ask these ‘legal people’: “What do you want? What are you trying to achieve in our society?”
I don’t suggest that we want to know their business, but what they value. We want to know how the conscience of each artificial person works.
And what better way to find out than a Statement of Shareholder Interests?
Tags: companies, legal entities, legal persons, natural persons, Statement of Shareholder Interests