Incorporating Purpose

Summary

In this Element, emerging legal forms of purpose-driven corporations are analyzed, revealing two crucial insights. First, within the traditional corporate law, a purpose is neither protected nor credible over time. While companies can have goals beyond profit, these are controlled by shareholders, who also appoint corporate managers. To protect social or environmental ambitions, especially during shareholder changes, a legal commitment from the company is essential. Second, these frameworks highlight the need for new legal foundations of the corporation. In an era where management decisions impact entire populations and the planet, law inadequately conceptualizes conditions for competent and independent management. The authors argue that embedding a purpose in the constitutions of corporations can provide these new legal foundations. Ultimately, the authors suggest that purpose provides a unified theoretical framework to discuss the various corporate legal forms and their respective potentials to be held to the contemporary social and environmental challenges.