Sustainable Companies: Possibilities and Barriers in Norwegian Company Law
60 Pages Posted: 18 Aug 2013 Last revised: 3 Mar 2015
Date Written: August 16, 2013
Climate change is a case in point for the necessity of working towards a sustainable development; towards achieving economic development and social justice within the non-negotiable limits of our planet, as is the biodiversity crisis. Norway, home of Gro Harlem Brundtland, chair of the UN-appointed Commission that through its report “Our Common Future” put sustainable development on the global agenda, prides itself on being an environmentally-friendly nation. Although Norway does have a good international repute, its oil-based economy makes the challenge of achieving a smooth transition to a sustainable economy (in the environmental and social sense as well as the economic) no less for Norway than for other countries. In such a transition, business will inevitably need to play an important role.
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 the 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.
As a part of the work in the Oslo-based research project Sustainable Companies, this paper therefore maps the possibilities and barriers in the Norwegian legal framework for companies for promoting sustainable companies in the environmental sense. The aim of the project is to find out how to better integrate environmental concerns into the decision-making in companies. The core focus of the papers, as of the project itself, is the hither-to to a great extent ignored area of company law.
This first section of the paper goes on to set out the backdrop: the Norwegian corporate scene and the legal sources and their inherent methodological challenges, for the guidance of the international reader. Section 2 analyses core company law issues relevant to the integration of environmental concerns in companies, including the purpose of the company and the company interest, and the competences of the various company organs. Section 3 analyses the important supportive area of reporting, accounting and auditing, which is the current compromise solution for those wishing companies to act more responsibly. Section 4 discusses liability and enforcement related to these rules and other means of promoting environmental sustainability in companies, while Section 5 briefly assesses other potential incentives and disincentives. Section 6 and 7 assesses the potential barriers and possibilities in the Norwegian regulation of groups of companies, while Section 8 concludes.
Keywords: sustainable development, company law, directors' duties, boards, CSR, corporate governance, climate change mitigation, general meeting, shareholder primacy, board diversity, Norwegian company law, shareholder activism
Suggested Citation: Suggested Citation