Realising the Potential of the Board for Corporate Sustainability
In Beate Sjåfjell and Christopher M. Bruner (eds), Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (Cambridge University Press, 2019), Chapter 49.
Posted: 8 May 2019 Last revised: 15 Jun 2020
Date Written: May 6, 2019
The board has a crucial role in determining the strategy and the direction of the corporation. However, currently the function of the corporate board is constrained through the social norm of shareholder primacy, reinforced through the intermediary structures of capital markets. This chapter argues that a reform of EU corporate law is key to integrating sustainability into mainstream corporate governance, into the core duties of the corporate board, to change corporations from within. While previous attempts at harmonising core corporate law at the EU level have failed, there are now three drivers for reform that may facilitate a change: the EU’s Sustainable Finance Initiative, which concentrates mainly on the environmental aspects of sustainability; the push to introduce legal requirements for due diligence on human rights; and experimentation by some national legislators within the EU with reforms of their own.
Keywords: duties of the board, planetary boundaries, social foundation, human rights, global value chains
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