International Shariah Research Academy for Islamic Finance (ISRA)
The main unit for organizing economic activity in the world today is the corporation. No other form of organization has come close to it in its effectiveness in generating wealth. This has, however,come with considerable costs, the most pressing being environmental degradation and climate change. In 2015, the United Nations agreed upon 17 sustainable development goals(SDGs). Given the legal structure of corporations and their past history, the problems they may pose to achieving some of those SDGs need to be examined. The mostproblematic areas are climate action, justice and strong institutions, reducing inequalities, and decent work. It is also worth noting that the SDG of economic growth may be oxymoronic and incompatible with some of the other goals. A key problem posed by the corporation as a legal entity is that its directors are legally required to maximize shareholder profits. That goal requires holding down costs, and the most effective way to do so is to externalize them.When the costs of corporate actions to the rest of society are fully calculated, their economic benefits begin to look less appealing than their balance sheets would indicate. The benefit corporation offers an interesting alternative form of business organization. There are also many sensible proposals for limiting the harm of regular corporations; however, the prospects of altering public policy on the basis of such proposals appear politically unattainable.
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