The Consideration of Sustainability by Corporate Directors

Journal of Environmental Law and Practice, Vol. 26, No.1, 2013

31 Pages Posted: 16 Jun 2014 Last revised: 27 Jun 2014

Jeff Bone

University of Alberta - Department of Marketing, Business Economics & Law; University of Connecticut, School of Law

Date Written: 2013

Abstract

There has been a long standing assumption that directors are required to consider only the interests of shareholders as part of the best interest of the corporation. My research suggests this assumption does not accord with Canadian law. Corporate directors are required to consider the best interest of the corporation which includes a diverse set of stakeholders. Recent case law suggests that corporate directors have a legal obligation to make decisions as a good corporate citizen. This research tests the legal liability of so-called corporate sustainability pledges and finds they do not create legally binding obligations upon corporate directors. However, directors are shielded from liability when engaging in a standard of conduct aligned with the protocols contained in a sustainability pledge. Therefore, while stakeholders may not be empowered to legally hold corporations to account on sustainability pledges, it remains in the purview of directors to decide whether they will follow these self-imposed guidelines.

Keywords: Sustainability, Corporate Social Responsibility, Corporate Fiduciary Duties, Corporate Law

Suggested Citation

Bone, Jeff, The Consideration of Sustainability by Corporate Directors (2013). Journal of Environmental Law and Practice, Vol. 26, No.1, 2013. Available at SSRN: https://ssrn.com/abstract=2445633

Jeff Bone (Contact Author)

University of Alberta - Department of Marketing, Business Economics & Law ( email )

3-23 Business Building
Edmonton, Alberta T6G 2C7
Canada

HOME PAGE: http://business.ualberta.ca/about/contact-us/school-directory/jeff-bone

University of Connecticut, School of Law ( email )

CT
United States

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