Reforming English Company Law to Promote Sustainable Companies

European Company Law Volume 11 Issue 2

University of Oslo Faculty of Law Research Paper No. 2014-05

5 Pages Posted: 25 Apr 2014 Last revised: 2 Jul 2014

Date Written: April 24, 2014

Abstract

English company law already allows company directors to take account of sustainability in their decision-making, but the corporate governance system gives them strong incentives not to do so. This article will argue that, if it is accepted that sustainability cannot be achieved through regulation, two main changes are necessary in English law. First, company law should be changed to require directors to identify and internalise the company’s externalities. Second, significant changes to the corporate governance system, which incentivises corporate management to pursue short-term shareholder value as expressed in the share price, will be required. However, the article concludes that neither of these changes are likely whilst neoclassical economic ideology maintains its grip on policy-makers.

Suggested Citation

Johnston, Andrew, Reforming English Company Law to Promote Sustainable Companies (April 24, 2014). European Company Law Volume 11 Issue 2, University of Oslo Faculty of Law Research Paper No. 2014-05, Available at SSRN: https://ssrn.com/abstract=2428700

Andrew Johnston (Contact Author)

Warwick Law School ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

HOME PAGE: http://https://warwick.ac.uk/fac/soc/law/people/andrew_r_johnston/

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