WASHINGTON, D.C. — Boyden Gray PLLC Managing Partner Jonathan Berry and former United States Attorney General William Barr published an op-ed in the Wall Street Journal arguing that Delaware’s escalating flirtation with environmental, social and governance (ESG) corporate-governance principles creates an opportunity for red states to develop attractive alternative destinations for corporate law.
Berry and Barr write: “Today, Delaware is falling in line with other blue states in embracing ESG, which rejects shareholder value as corporate law’s lodestar. Meanwhile, red states are developing potentially attractive alternatives.”
Berry and Barr predict: “As the logic of ESG-inspired “risk management” takes hold, expect Delaware law to elevate issue activism steadily over old-fashioned shareholder value throughout corporate law. . . . The clear signal is that Delaware’s commitments to both board-level deference and shareholder value will bend to accommodate ESG. That is bad news for management and shareholders alike.”
They contend: “Delaware’s weakness presents an opportunity for red states that oppose ESG. This year Texas elected to set up its own designated business court. Georgia, Utah and Wyoming recently did the same. Ambitious legislators and attorneys in these states and others can capitalize by developing an efficient alternative that upholds shareholder value.”
Berry and Barr conclude: “Like corporations, corporate law itself competes in a market. Some companies have learned the hard way that embracing ESG can boost their competitors. Delaware may soon learn that lesson too.”