Beate Sjåfjell

Company law and sustainability : legal barriers and opportunities

List of contributors Foreword Preface 1. Capitalism, the sustainability crisis and the limitations of current business governance Benjamin J. Richardson and Beate Sjafjell 2. Corporate social responsibility and environmental sustainability David Millon 3. Shareholder primacy: the main barrier to sustainable companies Beate Sjafjell, Andrew Johnston, Linn Anker-Sorensen and David Millon 4. The role of board directors in promoting environmental sustainability Blanaid Clarke 5. Accounting, auditing and reporting: supporting or obstructing the sustainable companies objective? Charlotte Villiers and Jukka Mahonen 6. Financial markets and socially responsible investing Benjamin J. Richardson 7. Limits to corporate reform and alternative legal structures Carol Liao 8. The future for company law and sustainability Beate Sjafjell and Benjamin J. Richardson Index.

Shareholder Primacy: The Main Barrier to Sustainable Companies

This investigation of the barriers to, and opportunities for, promoting environmental sustainability in company law provides an in-depth comparative analysis of company law regimes across the world. The social norm of shareholder primacy is the greatest barrier preventing progress, and it also helps explain why voluntary action by companies and investors is insufficient. By deconstructing the myth that shareholder primacy has a legal basis, and challenging the economic postulates on which mainstream corporate governance debate is based, this chapter reveals a surprisingly large, unexplored potential within current company regimes for companies to reorientate themselves towards sustainability. Together with other chapters in the same book, this chapter also suggests possible methods of reforming the existing legal infrastructure for companies and provides an important contribution to the broader debate on how to achieve sustainability.

Sustainable public procurement under EU law - new perspectives on the state as stakeholder

This book examines the effectiveness of the modernisation of EU public procurement law in light of the overarching treaty goals on sustainability. Contributors expertly cover core issues of public procurement, including life-cycle costing (LCC), ecoand fair-trade labels, the link to the subject matter (LtSM) requirement, the mandatory horizontal rule on environmental and social legal compliance and framework agreements. Also explored are the balancing of economic and non-economic objectives implied in sustainable public procurement. The volume proceeds to identify major unresolved issues in the use of sustainability considerations and highlights challenges and possibilities for the national implementation due to take place in 2016. The book contributes to the dismantling of the compartmentalisation that underpins unsustainable policy decisions by discussing the interface of company law and public procurement law and the implication of the new rules on sustainable public procurement for sustainable companies and specifically for smalland medium-sized enterprises (SMEs).

Norway: Corporate Governance on the Outskirts of the EU

This chapter gives an overview of the regulation of corporate governance in Norway, indicating also, to a certain extent, the practice related to and the effect of the regulation. The section following this introduction includes an overview of relevant acts and other sources of law. The main emphasis is on the third section, which focuses on the internal balance between the company organs, notably the composition of the different organs, the independence of directors, and shareholders’ rights and obligations. The fourth section focuses on external corporate governance, mainly the regulation of takeovers, whereas sections five and six give a brief overview on enforcement and recent development regarding reporting on corporate social responsibility.

Redefining agency theory to internalize environmental product externalities: A tentative proposal based on life cycle thinking

This chapter challenges the shareholder focus of the mainstream use of agency theory, and explores the possibility of redefining agency theory. The aim is to investigate the potential of internalizing environmental externalities of products, although much will be relevant also to social and economic issues. This chapter deals with the corporation, the dominant legal form of doing business, including the development of new products, and of manufacturing and marketing them. Recent research has given us some insight into why corporations in aggregate behave in such an unsustainable way. The reductionist approach of the Chicago School of law-and-economics in this field has served to promote the detrimental social norm of shareholder primacy, where the primary – even the only – goal of corporations is to maximize returns for shareholders. The influence of these ideas and the legal myths they have contributed to creating, of corporations as the property of shareholders and profit maximization as the legal duty of boards, can hardly be overestimated. Agency theory, which in its mainstream version is one of the dominant theories underpinning much of the current understanding of corporate law and corporate governance, has value beyond its current mainstream use. In the current situation, however, agency theory, in the dominant but rather limited and overly shareholder-focused variant, lends support to the social norm of shareholder primacy, which encourages the externalization of environmental and social impacts. Redefining agency theory for corporate law, as a tentative proposal for an analytical tool to find out how to internalize the environmental externalities of products, is a response to these concerns. After the introduction, the chapter explaining the usefulness of agency theory in analysis of corporate law, and then discusses the problematic nature of the mainstream use of agency theory in this context. A tentative proposal for redefining agency theory is presented, before the chapter concludes with reflections on the necessity of such a new approach in the context of the convergence of crises that we face.

When the Solution Becomes the Problem: The Triple Failure of Corporate Governance Codes

Corporate governance codes are widely regarded as the ultimate sign of a modern and efficient market economy. Bypassing the comparatively slow machinery of legislation, corporate governance codes are now a common instrument for corporations and shareholders to signal their perceptions of best practice and steer the governance of corporations in the desired direction. When a country’s corporate legislation is amended, corporate governance codes tend to be altered too—to always be one step ahead. But in what direction are these steps taking us? And who is deciding the aims and means? Already in 2006, Steen Thomsen criticised corporate governance codes for lacking a ‘theoretical or empirical rationale’ to the extent that they are ‘unlikely to do much good (and if so only by accident)’. Since then, corporate social responsibility language has made its way into ever more codes, without this necessarily resolving any of the increasingly cited issues with the codes.