The Levers of Sustainability: The EU Directive on Corporate Sustainability Due Diligence in Comparison to US Law

In February 2022, the European Commission proposed a far-reaching and comprehensive directive on corporate sustainability due diligence (the “Directive”). This Article describes the Directive, compares it to sustainability efforts in the US, and offers observations and critiques about both the Directive and US law. The comparison reveals several primary takeaways. First, likely owing to their significantly different social and political cultures, the EU Directive goes far beyond any US sustainability efforts. Second, and relatedly, the Directive is part of a rapidly progressing EU sustainability framework, which embraces sustainability as a stand-alone goal. In the US, however, considerations of sustainability are almost always framed within a financial paradigm, which distracts policy discussions and stalls regulatory efforts. Third, the Directive applies to companies based on size and industry. Enacting a rule with similar coverage would be difficult in the US because the corporate and securities laws on which sustainability obligations would most likely be based are jurisdictionally fragmented. Finally, in a departure from its usual hesitancy in the area, the US experimented with human-rights due diligence a decade ago, with the so-called conflict minerals rule. The rule failed for a range of reasons—political, structural, and regulatory—which still resonate and provide grounds for caution about the potential of the Directive to significantly improve human rights

What Ifs and Multi-directional symptoms PBL cases: two simple and functional adjuncts to problem-based learning materials

Although problem-based learning (PBL) is widely used in medical education for its many virtues, a number of deficiencies exist. As means of enhancing the experience of PBL for students, two relatively simple adjuncts to PBL are presented. What Ifs are short hypothetical scenarios, appended to the end of a PBL case, that require students to revisit elements of the PBL case just completed and apply their newly acquired knowledge to clinical reasoning in an altered scenario or to explore anew another dimension of the PBL case. Multi-directional symptoms PBL cases are cases where a common presenting symptom, rather than a specific pathology, is the focus of the PBL case and, following a core narrative of the initial patient presentation, a series of independent continuation narratives with appropriate histories, examination findings and investigation results, lead students to divergent diagnoses and management issues. In addition to keeping the PBL process fresh by rotating new materials regularly, these adjuncts extend the PBL process in the direction of case-based learning

Stewardship Theater

Large asset managers like BlackRock and Vanguard have amassed staggering equity holdings. The voting rights that accompany these holdings give them enormous power over many of the world’s largest companies. This unprecedented concentration of influence in a small group of financial intermediaries is a pressing policy concern. While law and finance literature on the topic has recently exploded, no one has offered a satisfying theory to explain their voting behavior. Existing work tries to understand their approach to voting in conventional terms—as an attempt to improve the performance of portfolio firms—but this is not why large asset managers vote the way they do. In contrast, this Article offers a political theory of asset-manager voting. Because of the power they wield, and the high stakes involved, large asset managers risk severe political blowback from looking like reluctant participants in corporate governance and from voting counter to the views of powerful politicians. As a result, politics rather than finance drives their decisions. Politically motivated asset-manager voting is problematic. It leads to market uncertainty and threatens the core division between business and government. It is also an illegitimate use of the voting power that asset managers are duty-bound to exercise on behalf of the shareholders in the funds that they oversee. But voting authority is a privilege not a right. To draw politics out of corporate governance, regulators should require that asset managers seek input from fund shareholders and reflect that input in their votes

\u27Public\u27 Mutual Funds

The concentration of public equity in the hands of just a few mutual-fund complexes has raised concerns about whether these institutions take seriously the stewardship obligations that come with the significant voting power that they have amassed. One leading theory, the agency-cost theory, is that the major fund complexes, all of which specialize in passively managed funds, lack the incentive to adequately police corporate managers on behalf of fund shareholders. Others counter that competition for mutual-fund investors provides sufficient incentive for satisfactory oversight. I argue that neither agency costs nor competitive incentives are the primary driver of stewardship behavior. Rather, the large mutual-fund complexes act out of fear of public retribution. They recognize that failure to look like good stewards could lead to potentially costly regulations. This ‘publicness’ view stems from work that explains important aspects of securities regulation as a response to the public’s desire to impose accountability and transparency mechanisms usually associated with public bodies on powerful private institutions. This lens suggests that large mutual-fund complexes act as stewards to avoid the consequences of publicness, but does not suggest a need for reform

De Facto Shareholder Primacy

For generations, scholars have debated the purpose of corporations. Should they maximize shareholder value or balance shareholder interests against the corporation’s broader social and economic impact? A longstanding and fundamental premise of this debate is that, ultimately, it is up to corporations to decide. But this understanding is obsolete. Securities law robs corporations of this choice. Once corporations go public, the securities laws effectively require that they maximize share price at the expense of all other goals. This Article is the first to identify the profound impact that the securities laws have on the purpose of public firms — a phenomenon that it calls “de facto shareholder primacy.” The Article makes three primary contributions to the literature. First, it provides a rich and layered account of de facto shareholder primacy. The phenomenon is not the result of considered legislation and regulatory decision. Rather, hedge-fund activists leverage the transparency that the securities laws afford to identify, and force companies to adopt, strategies that increase share prices. Their activities cast a shadow over the public market. Because firms must maximize share prices or face costly, disruptive, and protracted battles with activist hedge funds, they preemptively focus solely on stock values. The activists’ novel and opportunistic use of the securities laws has transformed the regulatory apparatus into a powerful lever of shareholder primacy. Second, this Article shows how this distortion of the regulations causes harm. The activities of activists bring the laws into conflict with principles of federalism and private ordering, which hurts entrepreneurs, investors, and equity markets. Finally, to address these concerns, the Article recommends a small change to the securities laws that would end hedge-fund activism and thereby disentangle the securities laws from corporate purpose

Mobility and transverse flow visualization using phase variance contrast with spectral domain optical coherence tomography

Phase variance-based motion contrast is demonstrated using two phase analysis methods in a spectral domain optical coherence tomography system. Mobility contrast is demonstrated for an intensity matched Intralipid solution placed without flow within agarose wells. Vasculature oriented transversely to the imaging direction has been imaged for 3-4 dpf in vivo zebrafish using the phase variance contrast methods. 2D phase variance contrast images are demonstrated with imaging times only 25% higher than a Doppler flow image with comparable statistics. En face images created by integrating depth regions of 3D zebrafish intensity and phase variance contrast data demonstrate vasculature consistent with expected images

Social Enterprise Law: A Theoretical And Comparative Perspective

This article analyzes social enterprise from a theoretical and comparative perspective. Social enterprises are distinct from nonprofits because they have equity-holders; they are distinct from socially minded for-profits because their mission is sacrosanct. We set out a regulatory template to support entities with this unique hybrid character. Only companies that commit to a mission-centric purpose, and adopt transparency and accountability mechanisms that police faithfulness to this commitment, would be entitled to call themselves “social enterprises.” This narrowly tailored regulatory structure would allow these firms to stand out and attract likeminded consumers and investors. Neither the US nor the EU offers something like this. Social enterprises in the US may form as benefit corporations and obtain the related B Corp certification. These mechanisms, while laudable, fall short because they group socially minded firms and social enterprises together despite the important distinction between the two. Such conflation is not a problem in the EU. A number of EU countries have specific social-enterprise regulations. But the rules vary greatly. They also tend to define social enterprise too narrowly, fail to mandate appropriate governance structures, and lack transparency mandates. A proposed EU-wide rule would help harmonize the area, but it is too reliant on country-level rules to have a significant impact. Social enterprises on both continents would benefit from new rules that appreciate their unique role in the economy and hold them to their principles

Blockchain - A Solution to Age-old Problems: Overview, Case Examples and Research Ideas

Blockchain is an emerging technology that is already beginning to transform business models, and is a topic about which information systems scholars and teachers need to become more knowledgeable. This essay summarizes blockchain technology and discusses several use cases where organizations implemented blockchain solutions for issues that have had a long history. We then summarize our findings from across these cases and offer some research suggestions

How Did Corporations Get Stuck in Politics and Can They Escape?

Corporations have always been involved in politics, but today is different. They are publicly taking positions, either directly or indirectly, on contested political and social issues unrelated to their businesses. In contrast to the conventional wisdom, we argue that this practice, which we term “corporate political posturing,” is problematic. First, it is of dubious value to the corporation and its stakeholders. Corporate political posturing often backfires, it does so unpredictably and potentially catastrophically, and it is particularly susceptible to agency costs. Second, it is harmful to society. The fundamental problem is that corporations are institutionally ill-equipped to take center stage in policy debates. They are inherently self-interested economic actors with goals that often conflict with those of society. This manifests in statements that tend to polarize rather than enlighten and actions that undermine the positions that they back publicly. We surmise that corporations themselves are ambivalent about taking policy positions but are caught in a feedback loop in which customers, employees, and investors demand political involvement. Corporations thus engage in response to competitive pressure, which normalizes the conduct and leads to escalating expectations for further engagement. We see several ways to break this cycle. One possibility, which we consider and reject, is to subject political posturing to distinctive governance rules. A second option is voluntary disarmament. Borrowing from the Business Roundtable Statement on Corporate Purpose, we suggest that corporations could voluntarily and publicly commit to refrain from political posturing. A third option is for corporations to provide greater transparency, either voluntarily or in response to regulatory requirements. If corporations disclosed the extent to which their actions were consistent with their public positions, we predict that fewer corporations would engage in posturing and those that do would back their statements with conduct that matches