Integrating Sustainability into Corporate Governance

Sustainability in its various guises is perhaps the most pressing issue facing humankind. Companies have to play their part in transforming their business models to meet this imperative. The conventional approach to company law and corporate governance has been that companies should produce shareholder value, with policymakers relying on either specific regulation or informed markets to correct undesirable externalities and ensure that companies operate in a sufficiently sustainable manner. An emerging research sub-field, which examines the relationship between corporate governance and sustainability, suggests that, for a number of reasons, this conventional paradigm has failed. Some of those working on this relatively new area of research are currently exploring how corporate governance processes might be adapted so as to steer companies towards greater sustainability without driving managerial accountability. This chapter contrasts the flawed conventional assumptions that either instrumental regulation can deal with these issues or that, given sufficient information, markets will steer companies towards sustainability with recent proposals from the European Commission to enhance sustainability reporting and mandate human rights and environmental due diligence as well as recent policy proposals by critical scholars. This research agenda represents a new and important to challenge to conventional, shareholder-centric corporate governance