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Sustainable Value Creation Within Planetary Boundaries—Reforming Corporate Purpose and Duties of the Corporate Board

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  • Beate Sjåfjell

    (Faculty of Law, University of Oslo, Oslo 0164, Norway
    Faculty of Economics and Management, Norwegian University of Science and Technology, Trondheim 7491, Norway)

Abstract

Business, and the dominant legal form of business, that is, the corporation, must be involved in the transition to sustainability, if we are to succeed in securing a safe and just space for humanity. The corporate board has a crucial role in determining the strategy and the direction of the corporation. However, currently, the function of the corporate board is constrained through the social norm of shareholder primacy, reinforced through the intermediary structures of capital markets. This article argues that an EU law reform is key to integrating sustainability into mainstream corporate governance, into the corporate purpose and the core duties of the corporate board, to change corporations from within. While previous attempts at harmonizing core corporate law at the EU level have failed, there are now several drivers for reform that may facilitate a change, including the EU Commission’s increased emphasis on sustainability. Drawing on this momentum, this article presents a proposal to reform corporate purpose and duties of the board, based on the results of the EU-funded research project, Sustainable Market Actors for Responsible Trade (SMART, 2016–2020).

Suggested Citation

  • Beate Sjåfjell, 2020. "Sustainable Value Creation Within Planetary Boundaries—Reforming Corporate Purpose and Duties of the Corporate Board," Sustainability, MDPI, vol. 12(15), pages 1-15, August.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:15:p:6245-:d:393967
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    References listed on IDEAS

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