The “Philanthropic” Duties of the Board of Directors in the New Paradigm of Responsible Capitalism

The prevalence of the shareholder primacy doctrine from the eighties onwards led to the misinterpretation of directors’ duties as only owed to shareholders. It became the theoretical foundation of an era of short-termism, excessive risk-taking, and unsustainable corporate practices affecting the environment and society for the sole purpose of maximizing corporate profits and the value for shareholders. The central role assumed by sustainability issues and the urgency of moving toward a regenerative economy to address the social and environmental challenges confront us with the need to investigate to what extent directors are nowadays expected to fulfill their duties with a “philanthropic approach,” i.e., seeking to promote the well-being of mankind, defying – if necessary – the traditional and deified ideology of shareholder primacy. Indeed, looking at the recent development of the legislative and regulatory framework (such as laws providing for sustainability related disclosure obligations, supply chain due diligence liability, dual-purpose companies, and broader directors’ duties), as well as the law in action (with ESG-led shareholders’ activism or litigation), it is possible to identify a growing tendency toward the expansion of directors’ duties boundaries, which nowadays increasingly entail, or as a minimum legitimize, a philanthropic approach in the decision-making and in setting the company's strategy and policies.