Towards a Sustainable Development: Internalising Externalities in Norwegian Company Law
First Sustainable Companies Workshop, Oslo, January 2010
38 Pages Posted: 23 Nov 2010 Last revised: 14 Mar 2012
Date Written: November 21, 2010
The vast impact that the operations of companies today, on an aggregated level, have on the global economy, on society in general and on the biosphere and the atmosphere, means that a critical analysis of the purpose of companies and regulatory framework within which they operate is crucial to a deeper understanding of the correlation between society and sustainable development. The company is the most important private legal vehicle to gather capital, generate profits and redistribute income in the world. Companies are also the main contributors to anthropogenic greenhouse gas (GHG) emissions through their choices concerning research and development, their use of resources, their production and transportation, and their – and the end users' – use and recycling or discharge of products. In other words, companies are a major contributor to the problem. They can also become a key factor in finding the solution.
The discussion of how to resolve this should rise above and go beyond the corporate social responsibility (CSR) debate. The hypothesis that this article, and indeed the whole Sustainable Companies project is based on, is that the internalisation of environmental externalities is the key. This article discusses the issue of internalising externalities in Norwegian company law, with some reference made to the company law of the other Nordic countries.
In Section 2 of this article, I will explain why we need to discuss the internalisation of environmental externalities in company law. I then move on to investigate the status concerning the protection of the environment in the context of company law. First, in Section 3, whether environmental concerns are expressly regulated in Nordic company law. As this, not surprisingly, does not yield much, I will move on to Section 4: Is there room for environmental concerns in Nordic and particularly Norwegian company law? This will lead me into the competence of the company organs, and I will set out the reasons for my conclusion that we need an express inclusion of environmental concerns in the core of company law. In Section 5 I put forward a tentative proposal for internalising environmental externalities in company law. Section 6 summarises.
Keywords: sustainable development, sustainable companies, internalising externalities, environmental externalities, Norwegian company law, Nordic company law, accounting law, climate change
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