Directors' duties in the age of agentic artificial intelligence: How can boards navigate corporate purpose and the stakeholder interests of employees around AI adoption?

Abstract

As boards engage with the adoption of artificial intelligence (AI), including agentic AI to drive operational efficiencies, this presents new opportunities for profit maximization. AI adoption is increasingly identified with employee role displacement in companies, and the interests of employees as stakeholders require exploration. A novel question posed is whether, in an age of AI ascendancy, AI may warrant being given stakeholder status as its role in the company approximates or eclipses that of human employees. The article probes four distinct models of corporate purpose within the directors’ duty to act in the best interests of the company – the shareholder primacy model, the Enlightened Shareholder Value model, the stakeholder friendly model and the stakeholder value model, highlighting the available scope for directors to accommodate the interests of employees around AI adoption in decision-making by boards around AI. It is concluded that, given the degree to which directors are insulated from legal scrutiny in relation to their best interests duty, adopting a wider law in context approach to promote employee welfare would serve the interests of employees, directors and companies alike. This would see directors engaging meaningfully with employees and providing opportunities for reskilling to adapt to the age of AI.