Sustainable Corporate Governance. An Overview and an Assessment

Sustainable Corporate Governance became a controversial topic after fierce academic and business criticism of an EU policy proposal. However, sustainability is here to stay, and corporate governance will have to deal with it. The relationship between corporate governance and corporate sustainability has, in fact, already become an important topic for board members, shareholders and regulators as well as academics. Many different ideas have been suggested and some have been implemented, although a set of best practices still has to emerge. This paper outlines what could be some of the key elements of sustainable corporate governance 2.0 including company law (director liability), long-term ownership, ESG investment, company purpose, sustainability committees, sustainability competencies, ESG incentives, climate plans, climate risk management, sustainability reporting, and internal carbon pricing. I conclude that the current fixation on regulation and ESG is counterproductive and suggest that a better way forward is to start with company purpose and to adjust corporate governance accordingly. Using this approach, I outline a tentative roadmap for sustainable corporate governance 2.0