Reforming English Company Law to Promote Sustainable Companies
European Company Law Volume 11 Issue 2
5 Pages Posted: 25 Apr 2014 Last revised: 2 Jul 2014
Date Written: April 24, 2014
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.
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