Corporate Governance and Sustainability

Abstract

Sustainability and social inequality are ‘grand challenges’ with a strong impact on companies and investors. The dominant theories and institutions of corporate governance present significant constraints on the capacity of practitioners, including company and fund managers, to engage in a timely and successful way with these grand challenges. The significant (opportunity) costs and (transition) risks to companies and investors associated with the continued use of these theories and institutions give rise to a growing sense of urgency and support by core actors for corporate governance reform. I discuss a number of institutional reform proposals across the domains of company law, reporting and finance and their potential consequences. I conclude by discussing implications of the relation between grand challenges and corporate governance theory and institutions for practitioners, regulators and academics.

Keywords: corporate governance; systemic risk; grand challenges; wicked problems; transition costs; regulatory governance; sustainability