Enabling Company Boards to Create Sustainable Companies: The Connection between Sustainability, Company Leadership and Law

Abstract

In this article the authors will explore which role law can play in empowering the boards of companies in the transition towards becoming more sustainable. In particular, Dutch company law will be analysed. The basis for this article is the Meta-Study and an expert meeting conducted by the authors of this article as part of the Sustainable Companies Project. The meta-study included a series of interviews with academic experts and the examination of empirical studies performed in various disciplines regarding the subject of company leadership and sustainability.

The Meta-Study is designed with reference to an empirical study conducted by Oslo University in 2013-2014 which focuses on the drive and motivation of board of directors of large companies towards (environmental) sustainability. In the Meta-Study, the authors identified various empirical studies of universities and other research institutes from the Western hemisphere that address the connection between law, leadership and sustainability. Sustainability in this context is predominantly viewed but is not limited to its environmental dimension.

In this article, the authors will first analyse the findings of the Meta-Study with a special reference to the definitions which were presented in the empirical studies concerning law, leadership and sustainability. Subsequently, they will identify (i) how law (either in the form of hard law or soft law) enables and promotes the connection between leadership and sustainability on a board level and (ii) to what extent corporate law supports company boards to put sustainability on the agenda. In this respect, while examining the provisions of the Dutch company law, the researchers will analyse a board instrument, i.e. the company purpose. The authors will conclude by making concrete suggestions about the role of law and how the company purpose legal instrument can help company boards to effectively put sustainability on the company agenda.