Stakeholder Value Versus Corporate Sustainability: Company Law and Corporate Governance in Germany

Abstract

The German system of company law and corporate governance is often referred to as a ‘stakeholder value system’ which places it in opposition to Anglo-American ‘shareholder value systems’. This characterisation suggests more scope for the promotion of corporate sustainability. This chapter analyses to what extent key aspects of German company law and corporate governance constitute barriers and create opportunities for sustainable development. These include the question in whose interest German public limited companies (Aktiengesellschaften) are run, the co-determined supervisory board in the two-tier board system, the fact that the executive remuneration structure should be aimed at the ‘company’s sustainable development’, shareholder rights and mandatory nonfinancial information disclosure. It is argued that there is, contrary to the prevailing perception, little scope in German company law and corporate governance for the promotion of the social and environmental dimensions of sustainable development.

Keywords: Aktiengesellschaft, two-tier boards, co-determination, sustainable value creation