COVID-19: Govts. & financiers increasingly urge companies to use (emergency) funds to support stakeholders not shareholders
As the scale and scope of the COVID-19 pandemic, and the impacts on business and workers and communities, continue to grow, so do calls for a ‘new social contract’ (see our blog here). Increasingly, companies are urged by governments and investors to focus not only on shareholders but to prioritise key stakeholders, particularly employees, in their responses to the pandemic. The EU Parliament, in a resolution adopted on 17 April 2020, for instance, insists public financial support should be conditional on companies using funds "to benefit employees [and] refraining from… tax evasion [and] paying out dividends".
In some countries, this is already a conditionality for business aid. The Government and Parliament in Denmark for instance stated that companies which pay out dividends, buy back own shares or are registered in tax havens would be excluded from business aid. They also said companies receiving aid should follow the UNGPs.
CSOs have also called for mandatory human rights and environmental due diligence to be attached as a condition for businesses rescued with public money.
This story will be updated with articles on action taken by governments, investors and financiers in this regard.