Shareholder Activism

Chapter six highlights the role of business in communitarianism, the thought that organizations have a fiduciary duty to protect the entire community in which they operate. 

Chapter nine addresses reporting, both required financial reporting and optional CSR reporting.  Often the public, including investors, have to take “their word for it” when an organization makes a claim.  But when society standardizes how organizations measure their three Ps (profit, people & planet) the common outsider can better compare like units. 

Fiduciary responsibility is a critical component of the corporation. In the last two decades, financial organizations have had to face stronger laws and regulations including more stringent fiduciary responsibilities. Aikin (2016) described fiduciary as originating in Roman law. The Roman law definition was “a person holding the character of a trustee, or a character analogous to a trustee, in respect to the trust and confidence involved in it and the scrupulous good faith and candor it requires” (Aikin, 2016, p. 18). The issue of trust is extremely important in financial transactions. In the past, financial organizations could hold dual roles in the process. They could be part of the manufacturing and distribution chain and give advise on which product(s) to purchase. This created some of the issues of the mortgage crisis. Reformation has changed these rules. Now, financial institutions must choose. Fiduciary accountability means that organizations must choose one of three ways. First, they may focus on product manufacturing and distribution, while stopping giving advice on products. Second, the organization could become solely an advisory organization. Finally, the organization could maintain all the processes by dividing the organization into detached silos that maintained completely separate management (Aikin).

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Chapter 6 The Corporation as Steward

Capitalism based on private ownership

Financial stewardship - ROI

(Hammond & Christensen, Chapter 6, 2016)