Corporate Climate Governance

Abstract

Changing market conditions and investor expectations have revived longstanding debates about corporate purpose and the place of stakeholder concerns in corporate law.  These theoretical divides now have immediate real-world implications for the future of corporate governance as international climate risk disclosure mandates all ask companies to embed stakeholder considerations - at minimum, climate risk factors - into corporate governance mechanisms in some form.

While none of these regimes purport to change corporate governance, this Article argues that climate disclosure mandates are nonetheless poised to transform dominant understandings of “good” corporate governance worldwide. This Article shows how mandatory climate disclosure shifts corporate governance norms and standards toward stakeholder integration and considers the implications of this shift for corporate governance practice and scholarship with reference to Delaware corporate law.  

This Article develops a typology of “thin” and “thick” “corporate climate governance” based on the primary U.S. and international corporate climate reporting standards.   It then identifies how even a “thin” conception of corporate climate governance engages the deep debates in corporate law over corporate purpose and shareholder primacy, and challenges the normative underpinnings of fiduciary duties as articulated by the Delaware courts.  

The Article’s second contribution is to show that even “thick” variants of corporate climate governance, represented by the European standards, respond to the core challenges that have been raised against stakeholder governance rules. While predicting variation rather than convergence, it argues that the advent of corporate climate governance across global capital markets therefore offers a new model of “good” corporate governance. The Article concludes by suggesting implications for the field and new directions for corporate governance research.