Document Type
Article
Publication Title
Boston University Law Review
Volume
106
Publication Date
2026
Keywords
Corporate risk, social and environmental, statekeholders, shareholders, business risk
Abstract
Corporate law scholarship and doctrine have largely operated on the assumption that corporate shareholders are interested in financial goals, while corporate stakeholders—such as employees, consumers, and local communities—are interested in social and environmental goals, like diversity and inclusion and climate change. Because of this assumption, the law largely requires a corporation to disclose information it considers to be “financially material” to shareholders—that is significant enough to impact the company’s financial position—including factors it considers to be financially risky.
Financial materiality is so embedded in corporate law doctrine that even if an issue is about social and environmental concerns, financial materiality is still the exclusive lens through which the law examines shareholders’ interests in the issue. However, recent developments between corporations, shareholders, and stakeholders make plain that shareholders and stakeholders both desire information on social and environmental issues that extend beyond their financial implications. Between 2020 and early 2024, corporations voluntarily disclosed such information to shareholders in relation to and apart from their financial implications.
This Article uses empirical data to show that starting in 2024, as political tides shifted, corporations also shifted to expressing social and environmental issues as financial risk factors to corporate interests, with little consideration of the relevance of those disclosures to nonfinancial goals. This shift has two significant consequences. The first is that disclosing social and environmental issues primarily as financial risk factors prevents shareholders and stakeholders from obtaining information that extends to other shared interests, including the impact of social and environmental concerns on employees, society, and the environment. The second is that describing issues like inclusion, human rights, and climate change as risk factors can chill progress towards improving them. This Article proposes solutions to expand access to information about social and environmental concerns that go beyond their financial goals, for both shareholders and stakeholders.
Recommended Citation
Atinuke O. Adediran,
Risky Business, 106 B.U. L. Rev. 117
(2026)
Available at: https://ir.lawnet.fordham.edu/faculty_scholarship/1451
