The EU’s Approach to Environmentally Sustainable Business: Can Disclosure Overcome the Failings of Shareholder Primacy?

Marjan Peeters and Mariolina Eliantonio (eds), Research Handbook on EU Environmental Law (Edward Elgar, 2020), Chapter 25, Forthcoming

University of Oslo Faculty of Law Research Paper No. 2019-60

Nordic & European Company Law Working Paper No. 20-06

17 Pages Posted: 27 Nov 2019 Last revised: 8 Apr 2020

See all articles by Andrew Johnston

Andrew Johnston

Warwick Law School

Beate Sjåfjell

University of Oslo - Faculty of Law

Date Written: November 27, 2019

Abstract

Achieving sustainability requires that business not only complies with environmental law, but also that business goes beyond that which is expressly regulated by environmental law. This chapter examines regulatory approaches that seek to integrate environmental sustainability into the decision-making of business. In canvassing the EU’s main policy and legislative initiatives, we find strong reliance on various forms of disclosure, insufficient to mitigate the destructive social norm of shareholder primacy. This Anglo-American, law-and-economics inspired concept is not rooted in EU law, but has spread and gradually colonised the discretionary space that European company law gives corporate decision-makers to decide on how to best run the companies. The result is a prioritisation of short-term maximisation of shareholder returns. A fundamental shift towards coherent and more stringent regulation is needed to mitigate shareholder primacy and realise the potential of European business to contribute to sustainability.

Suggested Citation

Johnston, Andrew and Sjåfjell, Beate, The EU’s Approach to Environmentally Sustainable Business: Can Disclosure Overcome the Failings of Shareholder Primacy? (November 27, 2019). Marjan Peeters and Mariolina Eliantonio (eds), Research Handbook on EU Environmental Law (Edward Elgar, 2020), Chapter 25, Forthcoming, University of Oslo Faculty of Law Research Paper No. 2019-60, Nordic & European Company Law Working Paper No. 20-06, Available at SSRN: https://ssrn.com/abstract=3494197 or http://dx.doi.org/10.2139/ssrn.3494197

Andrew Johnston (Contact Author)

Warwick Law School ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

HOME PAGE: http://https://warwick.ac.uk/fac/soc/law/people/andrew_r_johnston/

Beate Sjåfjell

University of Oslo - Faculty of Law ( email )

PO Box 6706 St Olavsplass
Oslo, 0130
Norway

HOME PAGE: http://www.jus.uio.no/ifp/english/people/aca/beatesj/

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