Sustainable Value Creation Within Planetary Boundaries—Reforming Corporate Purpose and Duties of the Corporate Board

17 Pages Posted: 5 Aug 2020 Last revised: 8 Jan 2021

See all articles by Beate Sjåfjell

Beate Sjåfjell

University of Oslo - Faculty of Law

Date Written: August 4, 2020

Abstract

Business, and the dominant legal form of business, that is, the corporation, must be involved in the transition to sustainability, if we are to succeed in securing a safe and just space for humanity. The corporate 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 article argues that an EU law reform is key to integrating sustainability into mainstream corporate governance, into the corporate purpose and the core duties of the corporate board, to change corporations from within. While previous attempts at harmonizing core corporate law at the EU level have failed, there are now several drivers for reform that may facilitate a change, including the EU Commission’s increased emphasis on sustainability. Drawing on this momentum, this article presents a proposal to reform corporate purpose and duties of the board, based on the results of the EU-funded research project, Sustainable Market Actors for Responsible Trade (SMART, 2016–2020). Keywords: corporate purpose; corporate boards; sustainability; due diligence; planetary boundaries; social foundation; climate change; human rights; EU company law; EU Green Deal; EU Sustainable Finance Initiative.

Keywords: corporate purpose; corporate boards; sustainability; due diligence; planetary boundaries; social foundation; climate change; human rights; EU company law; EU Green Deal; EU Sustainable Finance Initiative.

Suggested Citation

Sjåfjell, Beate, Sustainable Value Creation Within Planetary Boundaries—Reforming Corporate Purpose and Duties of the Corporate Board (August 4, 2020). Sustainability 2020, 12, 6245, University of Oslo Faculty of Law Research Paper No. 2020-20, Nordic & European Company Law Working Paper No. 21-04, Available at SSRN: https://ssrn.com/abstract=3666952 or http://dx.doi.org/10.2139/ssrn.3666952

Beate Sjåfjell (Contact Author)

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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