Debating Shareholder Primacy’s Role & Impact On Climate Change
On Tuesday, December 2nd, over 60 members of the Berkeley community gathered to hear two experts in the field debate the question: Is shareholder primacy compatible with addressing existential threats to humanity such as climate change? The excitement in the room was tangible.
The event, sponsored by the Center for Responsible Business, the Haas Finance Club, and the newly formed Beyond Capitalism Club, is part of a debate series that directly addresses this persistent question that lingers in classrooms, board rooms, and political discourse. The debate series leans into the Haas Defining Leadership Principles of Questioning the Status Quo, Students Always, and Beyond Yourself encouraging challenging conversations about the ideal corporate governance structures and even the ideal economic system. The goal of these discussions is to shed light on the complexities of these topics and expose areas for further research, and ultimately drive cultural change that shapes the business leaders of tomorrow.
Why is this question important now?
Since Milton Friedman declared in 1970 that “the social responsibility of business is to increase its profits,” shareholder primacy has wholly reshaped corporate America—but at what cost?
Over the past five decades, CEO-to-median-worker pay has skyrocketed from 20-to-1 in 1965 to 281-to-1 in 2024, while wages have stagnated. Meanwhile, corporate consolidation is rampant (take the most recent bidding war of Warner Bros by Netflix and Paramount Skydance set to further disrupt our media market) and global carbon emissions have more than doubled since 1970. As emerging business leaders, we are inheriting both record corporate profits and unprecedented existential threats (i.e. climate catastrophe, extreme inequality, eroding democratic institutions) that demand long-term shifts to our current governance structures because quarterly earnings reports were never meant to address these issues.
This debate is the entry point into a much broader question: are the frameworks taught in business schools actually going to enable us to solve the defining crises of our generation? Or do the leaders of tomorrow need fundamentally different tools?
The Debate
The debate was hosted Oxford style, honoring the roots of academic discourse, with each debater taking turns to open, rebut, and close. Adam Sterling, a Berkeley Law and Haas alum that currently serves as the Associate Dean of Executive Education and Strategic Partnerships at Stanford Law School, began his argument with a poignant analogy: corporations are like children and they need rules and guardrails in place to make them behave. He argued that Milton Friedman’s declaration that “the social responsibility of business is to increase its profits” has been misunderstood and taken out of context. Friedman goes on to say that businesses should increase their profits within the rules of society and it is up to society and government to set those rules.
Susan Mac Cormac, a Berkeley Law professor and Partner at Morrison & Foerster, opened her position declaring that our current system isn’t working and it must change. She asserted that philanthropy cannot be our only way of addressing climate change because philanthropic capital represents only 0.25% of all capital markets. Our current level of income inequality is at records not seen since the gilded age, while climate change and the acceleration of unregulated AI is steering society toward a sheer drop off. She elaborated that “instead of gradually applying the brakes, we’re going to come screaming up to [the cliff]. We’re going to slam on the brakes and the reverberations are going to be felt throughout every element of society.” Once we careen off this existential cliff, there is no clawing our way back up. Professor Mac Cormac, who also co-led the drafting group that created California’s Social Purpose Corporation, the precursor to Delaware’s Public Benefit Corporation (PBC), argued instead that we need companies to shift to new corporate forms. For example, PBCs allow shareholders to hold companies accountable to their dual fiduciary duties of both shareholder value and their stated public benefit.
The biggest plot twist from this debate was that Professor Mac Cormac ended up arguing in favor of the mechanism of shareholder primacy, but in a totally new form: the Public Benefit Corporation. Dean Sterling argued that no corporate form is going to change how corporations act if the fundamental rules of the game don’t change. To which both debaters conceded is a monumental challenge considering current federal deregulation efforts. The core tension the debaters highlighted was: whose responsibility is it really to address corporation’s contributions to climate change? And how should those responsible be held accountable in a system where corporate incentives are deeply at odds with reducing emissions and upholding democracy?
We concluded the debate with a panel discussion to acknowledge that the answer to the question “is shareholder primacy compatible with addressing existential threats to humanity such as climate change?” is not a simple yes or no. Our reality is unfortunately much more nuanced. We know that our government is failing to hold companies accountable (for example, the US government did not send official delegates to this year’s COP30 summit) and we know that companies will have to drastically shift how they approach their carbon emissions in the next 10 years if we have any chance of avoiding the worst version of climate catastrophe. Effectively addressing these life threatening issues requires innovative solutions with actors across multiple sectors and cooperation from business leaders.
Take Action
If this debate sparked more questions than answers for you, we get it! We’d love to hear from you about what you’re wrestling with and what we should debate next.
The December 2nd event was part one of a three-part Rethinking Capitalism Debate series. The next lunchtime debates on March 12 and April 7. Registration will open soon.
On April 29, the series will culminate in a visit from Andy Hoffman, Michigan Ross School of Business professor who was named this year’s Poets & Quants Professor of the Year, and author of Business School and the Noble Purpose of the Market.
If you’re a UC Berkeley student, we invite you to join the Beyond Capitalism club on Campus Groups. The Beyond Capitalism Club’s mission is threefold: to create a space for students who are curious, critical, or questioning of capitalism as it pertains to climate change and increasing wealth inequality; gather, learn, and explore alternative and more just economic systems; and facilitate & inspire students to pursue careers in support of an evolved and just economic system.
About the Debaters
Adam Sterling is a Berkeley Law and Haas alum and currently serves as the Associate Dean of Executive Education and Strategic Partnerships at Stanford Law School. Before joining Stanford Law in 2025, Adam was an Assistant Dean at Berkeley Law and was the Executive Director of the Berkeley Center for Law and Business. Throughout his career, Adam has explored the questions and tensions of shareholder vs. stakeholder capitalism. He founded and led the Sudan Divestment Taskforce, which put pressure on institutional investors to divest from industries with a direct negative impact on the genocide in the Darfur region of Sudan. During his tenure at the Center for Law and Business, he oversaw a workstream focused on sustainable capitalism and wrote a case study on Veeva Systems, which is the first public company that converted to a Public Benefit Corporation.
Susan Mac Cormac Taylor is a lecturer at Berkeley Law School and is a corporate partner at Morrison & Foerster where she serves as co-chair of the Energy and Clean Technology Group as well as the Social Enterprise and Impact Investing Group. Long before ESG (Environmental, Social, and Governance) entered the corporate lexicon, Suz recognized that companies must integrate environmental and social impact into their core business models. She co-led the drafting group that created California’s Social Purpose Corporation, the precursor to Delaware’s Public Benefit Corporation, now the foundation of America’s purpose-driven economy. Her hands-on structuring of Patagonia’s historic transfer of ownership into a Perpetual Purpose Trust cemented her global influence: she designed a legal framework ensuring the company will forever serve “Mother Earth.” In 2015, she was named the Most Innovative North American Lawyer by the Financial Times for her work championing legal innovation.
Ernesto Dal Bó, served as moderator of the discussion and is a professor at Haas where he holds the titles of the Phillips Girgich Professor of Business and Distinguished Teaching Fellow. He is a political economist interested in governance broadly understood. His research focuses on a range of topics: political influence, social conflict, corruption, morality and social norms, state formation, the development of state capabilities, and the qualities and behavior of politicians and public servants.
About The Blog Authors: Scout O’Beirne (FTMBA ‘26) and Margo Wilwerding (FTMBA and Master of Climate Solutions ‘26), co-founders & facilitators of the Beyond Capitalism Club and active members of the CRB’s Student Advisory Board.
