Emory Corporate Governance and Accountability Review


The rise of massive asset owners like large pension funds and sovereign wealth funds has created interest in the phenomenon of Universal Owners. The climate crisis, environmental degradation, and worsening inequality have also led to challenges to the current models of corporate governance, with a particular interest on the idea of corporate purpose. This paper fills a gap by addressing the intersection of these two trends, proposing a framework by which Universal Owners should view corporate purpose. I argue that from a returns-maximizing perspective, Universal Owners should prefer a flavor of shareholder primacy that believes the corporation’s purpose is to contribute to sustainable economic growth. In the course of answering this question this paper also advances our understanding of Universal Owners by clarifying the difference between ESG investors and Universal Owners, and arguing for large index funds to be treated as a type of Universal Owner. This paper also contributes to the literature on heterogenous shareholder interests by identifying the potential conflict between Universal-Owners and non-Universal Owners as another example of this conflict, and one where current corporate law resolves against Universal Owners.