Abstracts
It is time to get real about corporate sustainability. In this chapter, I am not going to make the argument for the necessity of the contribution of business to achieve sustainability and how sustainability-oriented legislation is necessary to secure that contribution. That argument is made multiple times elsewhere, by many scholars. This chapter discusses the question of how we can use law to ensure the contribution of business to sustainability; concretely, how to integrate sustainability into corporate governance. Integrating sustainability into corporate governance is also by the European Commission seen as a prerequisite for securing the contribution of business to sustainability.
The core of the proposal is to implement a general corporate duty to act sustainably, with the corporate board as the key actor. For that we need to go to company law, which is the regulatory infrastructure for decision-making in business. Reforming company law is not a silver bullet but it is a key contribution to the regulatory jigsaw puzzle of sustainability. Sustainable value creation is increasingly referenced in corporate governance. I suggest that the concept needs to be interpreted within a research-based concept of sustainability, positioning it within the concept of planetary boundaries. Thereafter, drawing on work from two international research projects, I discuss how the concepts of ‘sustainable value creation’ and ‘planetary boundaries’ can be used to establish a general duty and thereby be integrated into corporate governance, with company law duties of the board at the core.
As a follow-up of the EU’s Sustainable Corporate Governance initiative, the European Commission in February 2022 presented its proposal for a Corporate Sustainability Due Diligence Directive. With its suggestion for a sustainability-oriented ‘duty of care’, it is directly relevant to the discussion of a corporate duty to act sustainably. I therefore engage with this proposal to the extent possible within the constraints of space, in the discussion in this chapter. I also discuss due diligence, as a key tool to operationalise such a general duty, where the proposed Directive is a part of the analysis. The chapter further contains a brief discussion of enforcement questions.
Preprint available at: https://ssrn.com/abstract=4224255