Corporations in the Crosshairs: Stakeholder Activism and the Role of Corporations in Society

Imagine that you sit on the board of directors of a Canadian public corporation on January 1^st, 2020. The economy is strong, there is no inflation of consequence, and the world is relatively peaceful. Consumers are healthy and spending their money at your company. Now, fast forward to January 1^st, 2025. Over those five years, what did you, as a public company director, deal with? COVID-19 and the world shutting down; war in Europe and the Middle East; increasingly divided societies; inflation and the steepest interest rate hikes in a generation. Meanwhile, an ongoing climate crisis threatens business operations with fires, floods and severe weather, and polarized societies are leading to increasingly charged political debates. This stark change in circumstances shows that in business, uncertainty is a feature, not a bug. But the degree of uncertainty over the last five years has been greater in my view than at any time since World War II. The severity of this uncertainty places enormous pressure on corporations and those that run them—management (as well those that oversee and supervise management), as well as boards—in Canada and around the globe. This tumult, along with the rise of social media and inequality, has led to an increasingly polarized political and social climate, including among the stakeholders that matter to the success of a corporation: employees, customers, local communities, government, and regulators, among others. This polarization, which is not unique to North America—though we certainly see a lot of stories from Canada and the United States—leads to significant complexity for those who manage and oversee companies as they operate and continue to integrate ESG priorities into their strategy and business efforts. Stakeholder expectations and regulatory landscapes vary widely, even within a single country, making it challenging for corporations to implement consistent ESG strategies. For instance, in the United States, there is a stark contrast between states like California and New York, which promote pro-ESG regulations, and states like Florida and Texas, which actively work against ESG initiatives. Texas has banned state pension funds from investing with certain asset managers deemed to be discriminatory against the oil and gas industry—all while California has pushed public companies to adopt environmental policies. You might be tempted to think: “These are just two American states, and the challenge is not that significant.” But both California and Texas have larger economies than Canada. This example is emblematic of the challenges that management and boards face on ESG issues, especially environmental and social ones. This impact of a polarized landscape, even within one country, creates a challenging environment for companies trying to maintain consistent ESG practices within their enterprise. The impact becomes that much more complex on a global scale. From divided societies and war, to inflation and complex social debates, businesses are being pulled in multiple directions by multiple stakeholders, and these stakeholders are using the law as a tool to push their agendas. Boards of directors and management at corporations, but also at government agencies and non-profits, depend on their legal departments and external legal counsel in times of uncertainty. As you enter the legal profession, the job of counsel—which means adviser—is more complicated than ever. But as a profession, we have the tools that we need to help corporate boards and management navigate this uncertainty and exercise good judgement. And you as students are getting those skills here at McGill—from critical thinking to strategic and persuasive communications, to risk assessment and mitigation. When I articled, it was 1995; when I started teaching at Osgoode, it was close to the year 2000. Let me give …