Regulating for Corporate Sustainability: Why the Public-Private Divide Misses the Point
In 'Understanding the Modern Company' (Barnali Choudhury and Martin Petrin, eds.), Forthcoming
20 Pages Posted: 30 Mar 2016
Date Written: March 30, 2016
The intellectually interesting debate on whether the company is a public or private entity may serve as a deflection device, keeping bright academic minds occupied with discussing the nature of the company. Going into the debate risks exacerbating unnecessarily entrenched positions on the nature, purpose and responsibility of the company. It also risks enforcing an impression of a more hard-lined dichotomy between public and private, shareholders and other stakeholders, social responsibility and corporate governance, than there actually is a basis for. Accordingly, it may not help, but rather make more difficult, the discussion of the more important question: How do we regulate for corporate sustainability?
A fundamental barrier for businesses shifting voluntarily away from business as usual and onto a path of corporate sustainability is the social norm of shareholder primacy, as has been argued by several commentators and substantiated further through the comparative company law research of the Sustainable Companies Project. This provides the basis for the conclusion that legal reform is necessary. The company law debate we need to have is what such a legal reform should look like and how we can show businesses, policy-makers and legislators that such reform needs to be adopted.
This chapter briefly summarizes the comparative company law research on barriers to sustainability and the basis for the argument that company law reform is necessary. Thereafter, a tentative reform proposal for a first step towards corporate sustainability on EU level is presented. The chapter closes with some reflections on what future research should look into and on the hope for achieving sustainable policies.
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