Using law to further corporate social purposes: Lessons from faith organisations
Published: 11 January 2024
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In this blog Professor Irene-Marie Esser, Dr Catriona Cannon and Professor Iain MacNeil discuss their proposed project which will explore how the legal structures of faith-based organisations might guide profit corporations towards a stronger social purpose, even within a shareholder-driven system.
There is increasing pressure on business today to imbue a social benefit into their operations. The growing expectation that business should not solely pursue profit but should, rather, contribute to the greater ‘social good’ is widely accepted. Less clear and the subject of more lively debate is how this can and should be achieved in practice.1 This debate, of course, is not new. Originally framed in terms of ‘corporate social responsibility’ and then more latterly as ‘environmental, social and governance’ concerns, it can be traced back to at least the 1970s. Yet it has gained traction in recent years, no doubt catalysed by the present attention given to just transition, social justice and the pressing need to alleviate inequality. Now framed in terms of ‘corporate purpose’, multi-stakeholder consideration is being given to the inclusion and manifestation of a social dimension in the corporate purpose of for-profit organisations.
Whereas most regard corporate purpose as a concept which can be adjusted directly at source, the School of Law’s Prof Iain MacNeil and Prof Irene-Marie Esser have advanced the argument that corporate purpose is more amendable to adjustment indirectly through alterations to profit, capital and governance.2 A proposed new project led by Professor Esser and supported by Dr Catriona Cannon and Professor MacNeil, will build on this research to explore what lessons on these so-called ‘levers’ of corporate purpose can be learnt from organisations with a faith ethos.
The inspiration to draw on faith organisations to explore, from a legal perspective, the operation of corporate purpose – a concept more commonly associated with the ‘secular’, for-profit sector – was derived initially from appreciation of the links between religion and corporate social responsibility evidenced in literature conducted in the business, management and ethics fields.3 Applying a legal perspective to a research area hitherto confined largely to other disciplines, invites attention to be given to the legal structure, vision and outcomes of organisations which pursue value creation outcomes which are not influenced (at least solely) by profit but rather by religious or faith-based principles.
The project team presented their proposed project at a multi-stakeholder event they hosted in February 2023 which brought together academics, practitioners, civil society representatives and theologians to discuss the relations among corporate law, religion and social responsibility. Among the speakers at the event was Anita Bennett of Eido Research, who presented the findings of research conducted at her former organisation, the Jubilee Centre, which identified positive contributions made by Christians to ‘purpose-driven’ business in the UK.4 Esser, Cannon and MacNeil’s proposed project will complement this research through exploring the legal mechanisms in purpose-driven organisations which support contributions of this type. A report of the event, which includes summaries of the speaker contributions, can be accessed here.
The proposed project, which will be conducted over the course of three and a half years, will deploy doctrinal and empirical methodologies to discern and explore through an examination of the legal structure, vision and outcomes of faith organisations, the contribution of profit, capital and governance factors to the achievement of purposes with a social good. The project’s ambition is that the learnings from the project will offer tangible and practical solutions for the secular, for-profit sector currently grappling with the complexities which surround the effective implementation of a social dimension to business within a legal framework which in the UK demands that companies act in the best interests of their shareholders.5
Further commentary on the background to the proposed project can be found in this magazine article written by Esser and Cannon and featured in December 2022 on Law & Religion UK.
Visit the project page for more information.
References
- The British Academy (2021) Policy and Practice for Purposeful Business (The British Academy), available at <<https://www.thebritishacademy.ac.uk/publications/policy-and-practice-for-purposeful-business/>> last accessed 19 June 2023.
- Davies P (2022) The role of corporate law in corporate purpose: the British Academy Report (The ECGI blog), available at << https://www.ecgi.global/blog/role-corporate-law-corporate-purpose-british-academy-report>> last accessed 22 March 2023.
- The Jubilee Centre (2022) 21st Century Pioneers: Faith, Enterprise and Social Purpose Research Report: The Jubilee Centre, available at << https://www.jubilee-centre.org/research-reports >> last accessed 19 June 2023.
- MacNeil, I and Esser, IM (2022) From a financial to an entity model of ESG. European Business Organization Law Review, 23(1), pp. 9-45.
- MacNeil I and Esser IM (2023), ‘The Elusive Purpose of Corporate Purpose’ in MS Silva et al (eds) Private Law and Sustainability. Intersentia, (forthcoming).
- Sjåfell B and Mähönen J (2022) ‘Corporate Purpose and the Misleading Shareholder vs Stakeholder Dichotomy’, University of Oslo Faculty of Law Research Paper No. 2022-43, Nordic & European Company Law Working Paper No. 22-08, available at SSRN: https://ssrn.com/abstract=4039565 or http://dx.doi.org/10.2139/ssrn.4039565 last accessed 19 June 2023.
- van Aaken, D, Buchner, F (2020), Religion and CSR: a systematic literature review. J Bus Econ, 90, pp. 917–945.
First published: 11 January 2024