The EVA Airways flight attendants’ strike continued after negotiations failed. By Sunday last week, the strike had caused the cancelation of almost 2,000 flights and business losses of nearly NT$1.8 billion (US$57.9 million), affecting hundreds of thousands of travelers and society. It has highlighted how traditional company law focuses on profit-making as a firm’s main purpose. Although modern corporate governance often encourages businesses to consider employees and consumers, operations essentially focus on shareholders.
Both sides have reasons and issues they are committed to. Flight attendants want to address an unequal relationship with their employer through a legal strike to obtain better treatment and working environment, but the airline wants to lower operational costs and maximize shareholder value, while following the law and corporate social responsibility, which is an obligation and the essence of corporate sustainable management. Due to the conflict between the two parties’ interests, solving the dispute overnight would be difficult.
From another perspective, if the purpose and nature of a company’s operations could change from a profit-oriented model to a "good governance" model that tackles social or environmental problems, it would be able to mediate the conflict of interests between the business and its shareholders on one hand and its employees or interested parties on the other. This could even change the income gap and social confrontation brought on by capitalism.
For example, at its establishment, a company could declare in its corporate bylaws that its purpose is not only profit-making, but also solving social or environmental problems, and the company’s management should bear corresponding legal liabilities for shareholders and interested parties in accordance with the bylaws. The company should regularly issue reports in compliance with the standards of an impartial third party.
In addition to the financial situation, the business should publicize the public welfare purpose of its operations. In this way, the business could attract investors who identify with this purpose, encourage talent to work for it and win support from consumers identifying with its ideals, so as to create a market and a system of good governance.
Policies and legislation that reverse the nature and purpose of a company’s operations are now an international trend. Legislation for "benefit corporations" has already been passed in 35 US states and Washington, as well as Italy and Colombia.
Although Taiwan still has not passed such legislation, the Ministry of Economic Affairs, pushed by Minister Without Portfolio Audrey Tang (唐鳳), plans to set up a registration platform for social innovation organizations, including for-profit companies. The ministry hopes to encourage companies to include social missions other than profit-making in their bylaws, and achieve market self-discipline through autonomous information disclosure. This highly anticipated policy would be helpful to the development of good governance.
However, the flight attendants’ strike shows that the Company Act (公司法) framework imposes many restrictions on the good governance business model, along with uncertain legal risk. Without clearly defined regulations, the good governance business model might cause management’s liabilities toward shareholders. Also, this type of company still lacks legal status and operational regulations, while problems such as the inability to effectively prevent “greenwashing” remain unchanged. Taiwan must urgently resolve the issue through legislation by amending the act or writing a benefit corporation law.
Richard Fang is vice president for student affairs at Chinese Culture University.
Translated by Eddy Chang
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