Current Resources

Artificial intelligence (AI) has the capacity to disrupt entire industries, with implications for corporate strategy and risk, stakeholder relationships, and compliance that require the attention of the board of directors. 

Click Here for Article

In a third 2022 article entitled “Greenwashing and the First Amendment” (https://columbialawreview.org/content/greenwashing-and-the-first-amendment/), Amanda Shanor and Sarah Light argue that the extent to which greenwashing can be regulated consistent with the First Amendment raises thorny doctrinal questions that have bedeviled both courts and scholars. Their essay analyzes how the First Amendment should tackle issues at the nexus of science, politics, and markets. It contends that the analysis should be driven by the normative values underlying the protection of speech under the First Amendment in the disparate doctrines that govern these three arenas. When listeners are epistemically dependent for information on commercial speakers, regulation of such speech for truthfulness is consistent with the First Amendment and subject to the laxer review of the commercial speech doctrine. This is because citizens must have accurate information not only to knowledgeably participate at the ballot box but also to have meaningful freedom in economic life itself.

In a 2022 article entitled “What’s ‘Controversial’ About ESG? A Theory of Compelled Commercial Speech under the First Amendment” (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4118755), Sean Griffith illuminates ambiguities in First Amendment doctrine as applied to SEC disclosure mandates. He identifies the First Amendment doctrinal hinge as “controversy.” Rules compelling commercial speech receive deferential judicial review provided they are purely factual and uncontroversial. Applied to securities regulation, Griffith argues that the compelled commercial speech paradigm requires the SEC to justify disclosure mandates as a form of investor protection. The Article argues that investor protection must be conceived on a class basis—the interests of investors qua investors rather than focusing on the idiosyncratic preferences of individuals or groups of investors. Disclosure mandates that are uncontroversially motivated to protect investors are eligible for deferential judicial review. Disclosure mandates failing this test must survive a form of heightened scrutiny. Griffith concludes that the SEC’s proposed climate disclosure rules fail to satisfy these requirements.

A 2022 article entitled “Corporate Politics: ESG and the First Amendment” (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4169280) is the
most analytically relevant to the Disney/DeSantis dispute. In the article, Benjamin Seymour argues that the Citizens United case not only dramatically expanded corporate free speech protections, but also enshrined a distinctive theory of corporate politics into the United States’ constitutional law and popular imagination. The Roberts Court’s
emphasis on companies’ deliberative function in transforming debates among stakeholders into enterprise-wide values rejected a competing realist view—analytically rooted in individual executives’ incentives and power to dominate political debate within the firm—that had defined First Amendment jurisprudence a generation prior. 

His essay explains how both sides of the contemporary debate over ESG policies accepted Citizen United’s invitation to view corporations as political actors and internalized the Court’s deliberative theory of the firm.

Professor Henderson’s article, at here, argues that “strengthening democracy is the only way to ensure the widespread survival of free-market capitalism, and with it the prosperity and opportunity that has changed the lives of billions of people.”  She recommends three steps that businesses can take.  The Brookings Report notes that “until recently, democracy has not been a focus of corporate campaigns in the public sphere, but concludes that the involvement “of the private sector in the defense of democracy is essential for democracy, and for business itself. As a Chatham House report stated recently, “Business should recognize its own stake in the shared space of the rule of law, accountable governance, and civic freedoms.”

The article, referenced here follows up on a 2001 article (Function Over Form: A Reassessment of Standards of Review in Delaware Corporation Law) that suggested ways to make Delaware corporate law standards “more predictable, encourage procedures that better protected stockholders and discourage meritless litigation”.  The new paper examines how Delaware law responded to the prior article’s recommendations and reviews recent cases.  Notably, one of the paper’s recommendations, advocating for a change to Delaware’s General Corporation Law to permit exculpation of officers (in addition to directors) has been taken up favorably by the Council of the Corporation Law Section of the Delaware State Bar Association.

Professor Grundfest’s article, at here, notes that it is not clear that the SEC has administrative authority to adopt the proposed rule, and also that there is a question under the Supreme Court’s controversial “major questions doctrine” relevant to the proposal.  He notes that advocates of the SEC’s proposed rule should “be concerned that the Biden administration stands on the cusp of an avoidable regulatory tragedy. By pushing the SEC, but not the EPA, to adopt sensible GHG disclosure rules, and by not advocating for a coordinated EPA-SEC reporting regime, the Biden administration fails to deliver on its ‘whole of government’ promise and risks having the SEC adopt climate rules that are a bridge to nowhere.”

Since the invasion of Ukraine began, Professor Sonnenfeld and his team have been tracking the responses of over 1,000 companies, at here.  The website states that “over 600 companies have publicly announced they are voluntarily curtailing operations in Russia to some degree beyond the bare minimum legally required by international sanctions — but some companies have continued to operate in Russia undeterred.”  These corporate reactions seem to raise fundamental questions.  Are they in the best interest of stockholders?  If not, do they represent a stakeholder approach to a social issue?  If so, what caused the stampede, relative to other social issues?  Is it a function of politics?  The severity of the situation, insofar as it involves an actual war?  The immediacy of the situation, suggesting there is a long-term/short-term aspect to the issue?  Is it explainable and defensible, from a stakeholder interest or a shareholder primacy perspective, that some companies ceased business entirely, while others took more measured steps or no steps at all?

Fiduciary Duties of Corporate Directors in Uncertain Times. This paper was commissioned by the Millstein Center at the request of participants in the Center’s General Counsel Corporate Governance Summit and as a part of the Center’s ongoing efforts to advance board excellence.

Download the paper

Board Excellence and Fiduciary Duties of Corporate Directors. This article is intended for corporate directors and explores the key issues that directors should understand with respect to their fiduciary duties.

Download article

The New Paradigm

Roadmap for an Implicit Corporate Governance Partnership
Between Corporations and Investors to Achieve Sustainable Long-Term Investment and Growth

Document prepared by Martin Lipton, Lawyer, Wachtell Lipton Rosen & Katz

Download full document