This post is part of the Oxford Business Law new blog series “European Commission Initiative on Directors’ Duties and Sustainable Corporate Governance Series”. The European Commission, Directorate-General for Justice and Consumers (unit A.3, Company Law) has invited feedback on the Sustainable Corporate Governance Initiative. In so doing, the Commission has kickstarted an academic discussion on the role of the board in furthering sustainability issues. This blogpost summarizes the authors’ submission to the European Commission’s Initiative consisting of Prof. Dr. Kerstin Lopatta, Prof. Dr. Alexander Bassen, and Prof. Dr. Wolf-Georg Ringe from the University of Hamburg.
We generally support the Commission’s objective to focus on long-term value creation and the alignment of corporate with societal objectives: there is strong empirical evidence that the integration of material sustainability factors in decision-making correlates positively with financial performance (eg, Friede, Busch and Bassen 2015; Grewal, Hauptmann and Serafeim 2020; Orlitzky, Schmidt and Rynes 2003; Revelli and Viviani 2015). However, the Initiative suffers from a number of shortcomings about which you can read more here.