Growing integration between sustainability and corporate governance: the role of government regulation

An expanding research agenda examines how corporate governance and sustainability (also referred to as corporate social responsibility, CSR) are increasingly related. Scholarship has primarily focused on how corporate governance shapes sustainability initiatives or how sustainability can shape corporate governance. However, management scholarship has remained rather silent on the role of government regulation in shaping this growing relationship. This is surprising because governments are increasingly requiring corporations to consider corporate governance and sustainability issues together. This chapter explores government initiatives to support a sustainable stakeholder agenda focusing on the impact on corporate governance. The chapter first defines sustainability and provides different perspectives on its relationship to government. It then presents examples of government initiatives to promote CSR and their effects on corporate governance. The chapter closes with some reflections on the need to explore how government sustainability regulation impacts the efficiency and democratic legitimacy of corporate actions.