Barr and Berry Reply on Delaware and ESG

Thank you to Lawrence Cunningham and Joseph Petito (Letters, Nov. 29) for responding to our article “Delaware is Trying Hard to Drive Away Corporations,” Cross Country, Nov. 25). We agree with Mr. Cunningham when he says Delaware’s corporate law remains shareholder-centric, the “gold standard.” Our concern is with how the evident interest of Delaware’s leading lights in environmental, social and governance (ESG) principles is likely to affect that gold standard.

What’s playing out is a classic motte-and-bailey tactic. Activists and boardroom advisers alike can use Delaware’s Caremark doctrine to push companies into ESG-inspired policies on diversity and sustainability under elastic conceptions of “risk management.” But if you question the compatibility of this regime with politically neutral corporate law, they retreat to the position that companies necessarily must be adopting such policies for the good of “long-term shareholder value.”