Sustainable Corporate Governance: A Way Forward

Abstract

The recently published ‘Study on directors’ corporate governance duties and sustainable’ prepared by Ernst and Young for the European Commission (EY report) has attracted many comments, largely critical. Despite all the justified criticism of the EY report, the potential of company law to make companies more sustainable should not be overlooked. In this article, we advocate the use of procedural regulatory instruments, such as disclosure or consultation requirements. Since the impact of procedural rules on sustainable governance is hard to predict, we also advocate a regulatory mix that may have a combined positive impact. Different procedures may affect different areas of the business of a company. Even if it is challenging to calibrate the variety of potential regulatory instruments, such a mix seems to be the best way forward at this point in time.