Nobuko Matsumoto: For-Profit Corporations and the Realization of Public Interest

In recent years, expectations have grown regarding the role that for-profit corporations should play in realizing public interest goals. The statement released in 2019 by the Business Roundtable, a group of CEOs in the United States, drew significant attention as it omitted the traditional view that a company exists primarily to serve its shareholders and instead mentioned a "commitment to all stakeholders."

In a related context, you may have heard the term "social enterprise." A social enterprise refers to a company that aims not only to generate profit but also to pursue the public interest. As an example of a social enterprise framework, a type of legal entity called a "benefit corporation," introduced under the state laws of various U.S. states, requires companies to define specific public interest goals such as environmental conservation, support for small and medium-sized enterprises, or child welfare as part of their corporate purpose. By adopting the benefit corporation structure, the management of that company no longer needs to worry about shareholders complaining about the use of corporate resources to achieve public interest goals. Additionally, in the "Community Interest Company (CIC)" legal entity type introduced in the United Kingdom, there is a cap on the percentage of profits that can be distributed to shareholders as dividends, with the remaining portion intended to be used for the public interest goals defined by each company.

In contrast, Japan does not have a special legal entity type designed specifically for social enterprises. However, I do not believe this necessarily means that Japanese companies are indifferent to public interest goals. It is possible that because it has traditionally been considered natural for for-profit corporations in Japan to prioritize stakeholders, the need for a special legal entity type has simply not been recognized.

While it is important for for-profit corporations to play a role in realizing public interest goals, if a company pursues public interest to the point of disregarding shareholder interests, there is a risk that investors may ultimately hesitate to invest in the company. Although it is a difficult challenge, the relationship between for-profit corporations and the realization of public interest will become an increasingly important issue for consideration in the future.