In Burwell v. Hobby Lobby, the Supreme Court upended the traditional foundations of corporate law. By allowing corporations to exercise legally recognized religious rights, the Court changed the very nature of a corporate entity. Moreover, the Court defied the conventional doctrine providing that the purpose of a corporation is to make profit for its shareholders. The case is being both praised and denounced by observers, but no one has yet fully analyzed how the Court’s reasoning paved the way for social impact investors to use the corporate form as a vehicle to achieve their objectives.
This Article is the first to connect the Hobby Lobby case to shareholder activism for social justice causes. The Article considers the existing methods by which advocates can use shareholder activism to create meaningful social change. The Article next examines how the Court’s expansion of the rights of corporate “persons” in Hobby Lobby created new legal arguments for corporate social responsibility advocates. For example, after Hobby Lobby, corporations can be considered moral “persons” who do not need to consider shareholder wealth maximization as the highest priority. This reasoning presents an exciting opportunity for investors trying to influence corporations to act in socially or environmentally beneficial ways. Accordingly, the Article will propose two ways social investors can act now to take advantage of Hobby Lobby’s extraordinary impact on corporate law doctrines: (1) Creating an innovative classification of stock to expand the voting rights of socially conscious investors, and (2) Shifting investments away from benefit corporations to larger and more influential companies. In the wake of Hobby Lobby, this Article forecasts the emergence of a new legal chapter in corporate social responsibility: Corporations as tools for generosity, not greed.
68 SMU L. Rev. 243 (2015).