December 7, 2017
Through a historical analysis of corporate law reforms in the United Kingdom (UK) during the twentieth and early twenty-first centuries, this paper traces the shrinking scope for corporations to take socially responsible decisions. It offers a detailed examination of the rationales and drivers of the reforms, and shows that, by focusing exclusively on the question of accountability of directors to shareholders, wider social concerns were “bracketed” after 1948, leading to a permanent state of “crisis,” which constantly threatens the legitimacy of the corporate law system. Following the Brexit vote, there are signs that the UK Government is willing to reconsider its historically narrow approach to corporate law by introducing some form of stakeholder representation. This paper concludes that such a change would be a more effective means of integrating social responsibility concerns into the corporate governance process than the current constrained voluntarist approach.