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Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability

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A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Sustainable Management".

Deadline for manuscript submissions: closed (31 March 2020) | Viewed by 66319

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Special Issue Editors

Prof. Beate Sjåfjell

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Guest Editor

Faculty of Law, University of Oslo, Norway
Interests: corporate law; corporate governance; sustainability; duties of the board; planetary boundaries; social foundation; EU law; law and economics

Dr. Maja van der Velden

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Guest Editor

Department of Informatics, The Faculty of Mathematics and Natural Sciences, Universitetet i Oslo, Oslo, Norway
Interests: critical systems thinking; repair; sustainable product lifecycles; sustainable digitalisation; transition design

Special Issue Information

Dear Colleagues,

We invite proposals for papers to be presented at the conference ‘Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability’ in Oslo on 24 October 2019, where we will discuss how to facilitate the transition to sustainability, with the aim of identifying concrete proposals. Subject to peer-review, accepted papers will be included in a Special Issue of the open-access journal Sustainability.

To achieve sustainability, it is crucial to secure the contribution of all market actors: Business, citizens, investors, and the public sector. We define sustainability as securing the social foundation for people everywhere, both now and in the future, while staying within planetary boundaries (Leach, Raworth and Rockström).

A number of barriers, gaps, and incoherencies prevent market actors from contributing to sustainability (see the SMART report Obstacles to Global Sustainable Business (2018) concerning obstacles to corporate sustainability). Current initiatives are insufficient in the face of the short-term pressure for maximization of financial returns to investors, together with a general tendency to see economic growth as a main policy target (rather than a means to an end). Together with silo-thinking and path-dependent, outdated economic models, this is keeping us on a track towards an unsustainable future. Many business models are still based on overconsumption. The lack of relevant, reliable, and verified information on sustainability impacts across global value chains is a hindrance to businesses and sustainability-oriented investors. It also acts as a barrier for sustainability-oriented citizens as consumers and workers and for the public sector when acting as procurer.

With this backdrop, we invite contributions from any relevant discipline, as well as transdisciplinary proposals. We welcome contributions concentrating on international questions, on aspects concerning the EU and the Member States, and proposals aimed directly at the market actors, as well as comparative contributions from other parts of the world.

Important deadlines:

Deadline for Abstracts: 20 June 2019
Papers will be selected for presentation at the conference in Oslo based on the submission in response to the call for papers. Subject to peer-review, these papers will be included in the special issue.
Deadline for Submissions: 3 October 2019 (by invitation and selected based on submitted abstracts)

Prof. Beate Sjåfjell
Dr. Maja van der Velden
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

Sustainability
Corporate sustainability
Planetary boundaries
Social foundation
Shareholder primacy
Global value chains
Sustainable business
Sustainable finance
Sustainable public procurement
Policy coherence for sustainable development

Published Papers (13 papers)

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Research

15 pages, 292 KiB

Open AccessArticle

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

by Beate Sjåfjell

Sustainability 2020, 12(15), 6245; https://doi.org/10.3390/su12156245 - 03 Aug 2020

Cited by 18 | Viewed by 6259

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). Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

38 pages, 480 KiB

Open AccessArticle

Comprehensive Approach to Relevant and Reliable Reporting in Europe: A Dream Impossible?

by Jukka Mähönen

Sustainability 2020, 12(13), 5277; https://doi.org/10.3390/su12135277 - 30 Jun 2020

Cited by 9 | Viewed by 5488

Abstract

Corporate reporting and governance are interlinked: Accounting and reporting inventions created the modern company, and without the modern company there is no entity from which to report. Due to its raison d’etre, reporting remained finance-centered, to protect financial capital providers. From the 1970’s, the question of the interests of ‘stakeholders’ emerged, with attempts of ‘social reporting’, ‘corporate social responsibility’, ‘environmental’, and ‘social and environmental’ and finally ‘integrated’ accounting and reporting. These trends are reflected also in the European Union legal framework, both in regulation of especially financial intermediaries and the ‘non-financial’ reporting. This article is based on an extensive literature review, research conducted in the Sustainable Market Actors for Responsible Trade (SMART) project, and socio-legal and economic empirical research based conceptual analysis of the impact of these reporting systems and their relationship to financial accounting and reporting. The result of the research is that sustainability is reduced to focus on institutional investors and other members in the investment supply chain, and climate change issues only, and new regulatory solutions are required. Based on the most recent developments in EU law and in European jurisdictions, possible paths forward are envisaged to encourage sustainability in reporting and assurance, and through that, in governance. As an outcome a set of regulatory reform proposals are given based on the SMART recommendations. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

25 pages, 340 KiB

Open AccessArticle

A Proposal for Reform of EU Member States’ Corporate Governance Codes in Support of Sustainability

by Georgina Tsagas

Sustainability 2020, 12(10), 4328; https://doi.org/10.3390/su12104328 - 25 May 2020

Cited by 3 | Viewed by 3626

Abstract

An overview of the European Union’s varying policies on the harmonisation of Member States’ company and securities laws dating back to the 1970s showcases the Commission’s averseness to deviate from the path dependence of the shareholder primacy norm and the existence of a series of policies that superficially afford attention to ‘stakeholders’ rights’, ‘sustainability’ and ‘corporate social responsibility’. The article seeks to demonstrate that the ‘greenwashing’ attempts it identifies in several of the Commission’s documents and legislative initiatives have given rise to problematic outcomes, one of which is the subsequent whitewashing of recent initiatives that aim to provide real support to sustainability concerns. The question the article sets out to answer is whether, at this stage in time, the main sociolegal challenges in the form of tensions that the Commission was faced with, in an attempt to address corporate governance at European level in a uniform manner, can now be resolved so as to better support sustainability. If so, what ‘softer’ options are available to the legislator to signal a renewed approach to corporate governance and a deviation from the path dependence shareholder primacy norm? The argument that the article puts forward is that in order to better complement the latest, more positive attempts, that aim to support corporations’ sustainable practices, a reform of European Union Member States’ Corporate Governance Codes to include a robust stakeholder friendly provision may well constitute one pragmatic way forward. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

13 pages, 412 KiB

Open AccessArticle

The Theorized Relationship between Organizational (Non)Compliance with the United Nations Guiding Principles on Human Rights and Desired Employee Workplace Outcomes

by Magda B. L. Donia, Salvador Herencia Carrasco, Sara Seck, Robert McCorquodale and Sigalit Ronen

Sustainability 2020, 12(5), 2130; https://doi.org/10.3390/su12052130 - 10 Mar 2020

Viewed by 4047

Abstract

Despite the presence of guiding legislation such as the United Nations Guiding Principles, respect for human rights is subject to the conscience of organizational actors. Given that some transnational corporations are more powerful than nation states, they play an important role in the economies in which they operate, often with far-reaching impact on the labor conditions and human rights protections within these countries. In the current global context, respect for human rights may be undermined when organizational decision-makers are tempted to ignore unethical practices due to considerations such as competition and short-term financial incentives. We propose that the higher standards to which younger generations increasingly hold corporations provide a compelling and “business case” incentive for the protection of human rights of external stakeholders by organizational decision-makers. Drawing on related research on corporate social responsibility and on projections regarding demographical changes in the workplace worldwide, we make the case for a bottom-line advantage to respecting human rights in attracting and retaining top talent in work organizations. We conclude by highlighting the theoretical and practical implications of our theorizing. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

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20 pages, 235 KiB

Open AccessArticle

The Role of Consumers in the Achievement of Corporate Sustainability through the Reduction of Unfair Commercial Practices

by Borko Mihajlović

Sustainability 2020, 12(3), 1009; https://doi.org/10.3390/su12031009 - 31 Jan 2020

Cited by 7 | Viewed by 3573

Abstract

The subject of this article is a determination of the potential of the prohibition of unfair commercial practice, as an institution of consumer law, established to strengthen consumers’ protection, to contribute to the achievement of corporate sustainability. The main objective of the paper is the identification of situations in which certain companies’ actions may at the same time be considered as unsustainable and socially irresponsible behavior, as well as unfair commercial practice. There are three such characteristic situations that were the subject of thorough analysis in the paper: (1) company’s constantly invoking to the concepts of corporate sustainability and corporate social responsibility (CSR) in its marketing activities, which is essentially incorrect because the company in practice breaches some of the basic postulates of these concepts, (2) breach of company’s code of conduct which contains the principles of corporate sustainability and CSR, and which the company has undertaken to be bound, (3) conducting many concrete acts which represent unfair commercial practice, and simultaneously have negative impact on the corporate sustainability and CSR. From the analysis of these three situations arises the conclusion that there is a possibility for indirect legal sanctioning of the unsustainable and socially irresponsible behavior of companies through the application of the consumer law rules on the prohibition of unfair commercial practice. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

24 pages, 1082 KiB

Open AccessArticle

More Than a Nudge? Arguments and Tools for Mandating Green Public Procurement in the EU

by Lela Mélon

Sustainability 2020, 12(3), 988; https://doi.org/10.3390/su12030988 - 30 Jan 2020

Cited by 28 | Viewed by 6794

Abstract

The present research paper analyses the EU general and mandatory sectoral legal framework on public procurement, arguing for its inhibiting effect on the EU-wide uptake of green public procurement. It explores de jure and de facto barriers to green public procurement, motivated by the need for a change in the business world towards more sustainable practices through preferably mandatory legal changes of EU corporate law. As the public procurement represents a strong nudge for a qualitative change in private market demand, accounting for a minimum of 12% of the national gross domestic product, it should become environmentally sustainable itself and guide markets through the qualitative and quantitative changes on the demand side. Given the complexity of the current legal framework and the novelty of the approach to public procurement as a strategic tool for the achievement of sustainable production and consumption, a better defined and clear legislative approach is called for, possibly in a mandatory form, clarifying the obligation of public procurers to account for sustainability in their practices, especially as regards incorporating environmental concerns in their purchasing activities. In its current form, the EU legislative public procurement framework entails a seemingly permissive attitude towards green public procurement, hampered in practice by the existing legal institutes in the field, which hamper the strategic use of public procurement and thereby its influence on sustainability on the private markets. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

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19 pages, 302 KiB

Open AccessArticle

Gender and Climate Change Disclosure: An Interdimensional Policy Approach

by Melsa Ararat and Borhan Sayedy

Sustainability 2019, 11(24), 7217; https://doi.org/10.3390/su11247217 - 16 Dec 2019

Cited by 16 | Viewed by 3955

Abstract

This paper investigates the impact of corporate boards’ gender diversity on voluntary public disclosure of climate change risks in an emerging economy context in which environmental regulations are weak and markets are ineffective. The investigation relies on data from the CDP (formerly known as the Carbon Disclosure Project) as a corporate sustainability reporting initiative supported by institutional investors, based on a sample of Turkish firms that were invited to disclose their climate change risks and greenhouse gas emissions over the period of 2010–2019 through the CDP platform. We report that the presence of women on board committees, as a proxy for their active involvement in corporate governance, increases the likelihood of voluntary climate change disclosure. We, on the other hand, found no evidence of a positive impact on climate change reporting with women’s overall representation in boards. These findings lend support to board reforms that aim to increase effective representation of women on boards for the better management of sustainability risks and responsiveness to stakeholder demands in countries where legislators are reluctant to introduce climate change reforms. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

22 pages, 920 KiB

Open AccessArticle

Integrating Sustainable Development Goals into the Belt and Road Initiative: Would It Be a New Model for Green and Sustainable Investment?

by Wei Yin

Sustainability 2019, 11(24), 6991; https://doi.org/10.3390/su11246991 - 07 Dec 2019

Cited by 25 | Viewed by 7460

Abstract

Given the challenges presented by climate change and related environmental pressure, a sustainable, investment-led development model, i.e., aligning investment with social and sustainability objectives, is needed to ensure long-term prosperity and generate sustainable growth. The UN’s Sustainable Development Goals (SDGs) was released to guide nations towards green and sustainable development and address governance deficits. The Belt and Road Initiative (BRI) launched by China, a development strategy involving investment in infrastructure development, intends to enhance regional connectivity, integration, and stimulate economic growth. These two agendas share the notion of ‘sustainable development’ and are growing increasingly relevant. Although various studies have analysed the sustainability of the BRI, the implementation of SDGs and the similarities and complementarities between the two initiatives, few of them touched on the possibility of the BRI to be a green and sustainable investment-led model by aligning the SDGs. This paper, thus, aims to contribute to the ongoing debate on sustainable development and infrastructure investment by exploring the possibilities and challenges of the BRI to be a sustainable, investment-led development model. By comparing these two agendas and seeking the linkages between them, this article recognises the potential of the BRI to play such a role while there are issues and risks of BRI that hinder the achievement of infrastructure development and sustainable investment. The paper recommends that, to exert the synergies from aligning the BRI and SDGs to seize substantial development benefits, it is necessary to enhance the sustainability of BRI projects, provide effective cooperation and communication with stakeholders, and adapt BRI to the national development policies of each partner country. Joint efforts taken by both state and non-state actors are indispensable. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

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15 pages, 242 KiB

Open AccessArticle

Extractive Industries and Investor–State Arbitration: Enforcing Home Standards Abroad

by Enrique Boone Barrera

Sustainability 2019, 11(24), 6963; https://doi.org/10.3390/su11246963 - 06 Dec 2019

Cited by 3 | Viewed by 3028

Abstract

Extractive industries can bring much-needed jobs to remote locations in developing countries. At the same time, there are too many examples where extractive projects bring environmental degradation and human rights violations. Some research has pointed out that the difference between an extractive project that brings positive spillovers for communities and one that destroys communities and poisons the environment is a strong rule of law. However, developing countries often lack strong legal institutions and have high levels of corruption. Furthermore, remote locations are usually the last safe haven for vulnerable populations stricken by poverty. This essay argues that, given these circumstances, home states have a responsibility to do more to control their outward investors, particularly regarding extractive industries. The essay concentrates mostly on Canadian mining companies given the plurality of conflicts involving them and a developing country. The essay will also analyze current efforts at the home state level to rein-in the conduct of extractive industries abroad and advise where they may fall short. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

12 pages, 240 KiB

Open AccessArticle

The Sustainable Corporate Objective: Rethinking Directors’ Duties

by John Quinn

Sustainability 2019, 11(23), 6734; https://doi.org/10.3390/su11236734 - 27 Nov 2019

Cited by 8 | Viewed by 4996

Abstract

Traditionally, the purpose of directors’ duties within company law is to ensure that the powers of management given to directors are properly exercised. For instance, instead of using their managerial powers to further their personal interests or for some collateral purpose, directors are under a duty to take decisions which they think will further the company’s interests. In most EU jurisdictions, determining what acting in the company’s interest means is not mandated by law, but is rather left to the subjective business judgement of directors. The discretion allowed by this duty has allowed for, influenced in part by a law and economics approach to company law, the shareholder value norm to become entrenched. This paper argues that the law of directors’ duties should evolve to provide specific guidelines to directors on the question of the corporate objective. It supports existing arguments for a reform of EU company law to include a new duty requiring directors to ensure sustainable value creation. The paper argues that any such duty should be framed objectively and be enforced through public mechanisms rather than a reliance on private actors. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

14 pages, 268 KiB

Open AccessArticle

Resistance to Regulation: Failing Sustainability in Product Lifecycles

by Mark B. Taylor and Maja van der Velden

Sustainability 2019, 11(22), 6526; https://doi.org/10.3390/su11226526 - 19 Nov 2019

Cited by 7 | Viewed by 5578

Abstract

International policy and law have long sought to ensure that states regulate the negative impacts of production processes on people and the planet. Sustainable Development Goal (SDG) 12 targets sustainable production and consumption; international conventions, such as the Basel Convention, or the Convention on Biological Diversity (CBD), and the International Labour Organisation Conventions, all seek to regulate toxic or labour-related impacts associated with industrial production. However, there is ample evidence that such impacts continue. At a time of increasing pressure to develop sustainable systems of production and consumption, we asked whether the existing legal frameworks are appropriate to the task of regulating for sustainability in consumer products. Drawing on research conducted into sustainability in the mobile phone lifecycle, this paper examines the regulatory ecology of hotspots of unsustainability in the product lifecycle of electronics. This paper finds that the interaction of regulatory disjunctures, business models, design of technology, and marginalisation combine to ensure that our systems of production and consumption are predisposed to resist regulation aimed at sustainability. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

19 pages, 278 KiB

Open AccessArticle

The 2019 ‘Fitness Check’ of State Aid Modernisation Reform of 2012—an Opportunity to Redefine and Reintroduce Sustainability into the EU/EEA State Aid Rules? The Example of the Transport Sector

by Małgorzata Agnieszka Cyndecka

Sustainability 2019, 11(22), 6328; https://doi.org/10.3390/su11226328 - 11 Nov 2019

Cited by 1 | Viewed by 3023

Abstract

This article intends to launch a discussion on the possibilities of introducing more sustainability into the rules on granting State aid. State aid law constitutes a crucial part of the internal market regulation. In principle, granting public support to companies is prohibited in the European Union (EU) as such state intervention distorts competition. In some cases, however, aid may be allowed if it pursues a legitimate public policy objective such as research, regional development, transport or environmental protection. In 2017, the EU Member States spent EUR 116.2 billion, i.e., 0.76% of GDP, on State aid at the EU level. While aid to the environment and energy saving promotes sustainability, the question is whether other types of aid also do so. This article provides a brief explanation of the rationale behind State aid control, explains how ‘good aid’ may be approved by the European Commission or EFTA Surveillance Authority (ESA) before it is granted by the Member States and proposes taking a closer look at the current guidelines for granting aid in the transport sector. This sector has a serious impact on the environment and human well-being, while it is heavily subsidised by the state. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

23 pages, 337 KiB

Open AccessArticle

Will the EU Commission Successfully Integrate Sustainability Risks and Factors in the Investor Protection Regime? A Research Agenda

by Michele Siri and Shanshan Zhu

Sustainability 2019, 11(22), 6292; https://doi.org/10.3390/su11226292 - 08 Nov 2019

Cited by 22 | Viewed by 7290

Abstract

Building a common EU framework for sustainable finance undoubtedly implies the integration of sound and sustainable processes and skills across the whole structure and governance of financial institutions. Consequently, a new financial paradigm is going to be needed, which will require the strengthening of investor care and protection, so contributing to the restoration of trust in the financial sector. In particular, on 18 December 2018, the European Securities and Markets Authority (ESMA) launched two public consultations on draft technical advice for the integration of sustainability risks and factors into the Directive on Markets in Financial Instruments (MiFID), the Alternative Investment Fund Managers Directive (AIFMD), and the Undertakings for Collective Investment in Transferable Securities Directive (UCITS) regimes, with the aim to clarify the so-called fiduciary duties and to increase transparency in the financial services industry. However, the success of the EU initiatives on investor protection regulation may be seriously endangered by the existence of many challenges, weaknesses, and contradictions raised by economists and stakeholders in relation to the definition of sustainability, ESG data availability and reliability, the development of an EU taxonomy, conflicts of interest, product governance, and suitability assessment. This paper starts by briefly analyzing the recent developments of the regulation of sustainable finance at the global level, then offers a more detailed view on the establishment of a common regime on sustainable finance in the EU, with particular reference to the action plan ‘Financing Sustainable Growth’. Then, it examines the recent proposals for regulation on sustainable finance, specifically considering the barriers to the integration of sustainability risks and factors in the EU investor protection regulation—with particular reference to investment services—with respect to its four main dimensions: (1) disclosure of product information, (2) conduct of business (COB) rules, (3) product governance and intervention, and (4) financial education. The paper concludes that the EU reforming proposals, though admirable, risk oversimplifying a complex issue that cannot be easily solved without considering its practical implications on each category of financial operators in the performance of different financial services. Full article

(This article belongs to the Special Issue Corporate Sustainability Reforms: Securing Market Actors’ Contribution to Global Sustainability)

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