Sustainable Business and Australian Corporate Law: An Exploration

Abstract

This article explores the extent to which the Australian corporate law corpus encourages or discourages pursuit of sustainable business on the part of companies. In particular, it investigates whether any specific provisions aimed at mitigating climate change have been introduced in corporate law or other laws that encourage companies to pursue sustainable business.

A critical review of corporate law provisions and their judicial interpretation reveals that the dominant shareholder primacy principle has been dented only partially – both legally and in actual business practices. The current permissive ‘enlightened self-interest’ approach is unlikely to prove adequate and in years to come, more changes in corporate law may be necessary to ensure that companies do not adversely affect the environment.

For example, it is desirable to impose explicit duties on directors to take into account the interests of non-shareholders, strengthen the non- financial reporting requirements, and hold a parent company liable for environmental wrongs committed by its subsidiaries.

Keywords: Sustainable Business, Climate Change, Australian Corporate Law, Carbon Pricing Policy, Enlightened Self-Interest, Disclosure/Reporting Requirements, Veil Piercing