Professor
Lynn M. LoPucki

For more information about this Project email lopucki@law.ucla.edu

Lynn M. LoPucki is the Security Pacific Bank Professor of Law at the UCLA Law School

What is the Stakeholder Takeover Project?

The Stakeholder Takeover Project is a plan for corporate stakeholders to use their market power to force corporations to act in socially responsible ways. A corporation’s stakeholders are the employees and managers who work for it, the customers who buy from it, the suppliers who sell to it, the lenders and investors who provide its capital, and the communities in which the corporation does business. To act responsibly means to act in a manner that saves the planet, preserves the environment, provides meaningful and secure employment, respects human rights, treats people fairly, and improves peoples’ lives.


The project is based on five premises:
  1. People want corporations to change.
  2. Studies show that large majorities of customers are willing to pay more for the products and services of responsible corporations. Fifty-five percent of surveyed Americans say they would take a pay cut to work for a responsible company. Forty-four percent “worry a great deal about climate change” and twenty-six percent of total US-domiciled assets under management are invested using socially responsible investment strategies.

  3. Stakeholders have the power to force change.
  4. Stakeholders supply all of the corporations’ resources. Acting collectively, stakeholders can change corporate behavior by preferring responsible corporations in all their dealings—as customers, employees, suppliers, communities, investors, and credit extenders.

  5. Change requires standardized information.
  6. To prefer responsible corporations, potential stakeholders must know which ones they are. That information must be comparable across corporations, tailored to the potential stakeholders, easy to use, and available at the point of decision making.

  7. The necessary system is nearly complete.
  8. The Global Reporting Institute (GRI), Sustainable Accounting Standards Board (SASB), and other non-governmental organizations have promulgated competing reporting standards. Governments and corporations have begun the process of choosing the best.

  9. Stakeholders need to act now.
  10. Stakeholders need to insist that the reporting standards chosen will provide all stakeholder groups, not just investors, with the information they need to effectively express their preferences in market choices. Once a set of standards are chosen, they will be difficult to change.

An effective information system would enable stakeholders to control corporations. The ramifications are huge and complex. Stakeholder control would extend potentially to any change in corporate behavior that had widespread potential stakeholder support.


What are the Objections?

So far, there are thirteen: (Click on each objection to view its response.)

  1. The purpose of a corporation is to make as much money as possible for its shareholders, not to take environmental and social action beyond that mandated by law.
  2. Stakeholders are not competent to make corporate decisions.
  3. Corporate social responsibility is going to cost more, and customers won’t pay it.
  4. To ensure everyone an equal voice, governments, not markets, should control corporations.
  5. Corporations will not give up their control.
  6. Corporations would be collecting and reporting their own social responsibility data. They will cheat.
  7. Corporate social responsibility will be divisive, as illustrated by the controversies over athletes kneeling during the national anthem and voter identification laws.
  8. Corporations will not voluntarily report to standards that disadvantage them.
  9. Corporations will use their financial clout to confuse potential stakeholders about which rating and ranking systems are best.
  10. Corporate social responsibility is so subjective that it cannot be captured meaningfully in numerical data.
  11. Stakeholders don’t have enough financial power to change corporate behavior.
  12. If stakeholders could control corporations, they would have done it already.
  13. Reporting will not curb emissions or pollution because reporting corporations will transfer their emitting or polluting operations to nonreporting corporations.

Links to standards promulgators