Four years ago, the University of Oslo Faculty of Law launched its ambitious Sustainable Companies Project. Lead by Beate Sjåfjell, the Project's goal was “to find out how to integrate environmental concerns better into” company decision-making, and in this way “contribute to sustainable development.” The final conference, “We Make It Happen”, took place December 5th and 6th in Oslo.
Earlier phases of the Project, including the 2011 conference, at which I also presented, identified the main barrier to sustainable companies as the shareholder primacy model of corporate governance. The cross-jurisdictional analysis undertaken by Project members and presented at the final conference by Andrew Johnston, concluded that, contrary to popular belief, shareholder primacy is not the law in any jurisdiction (the UK comes closest, requiring directors to act in the best interests of shareholders as a whole). The problem is that statutory duties of directors tend to be so vague (in Canada, the duty is to act in “the best interests of the corporation”) that the shareholder primacy norm was able to step in to fill the gap. As Johnston noted, the argument that acting in the best interests of shareholders serves the best interests of society has – or at least had, prior to the 2008 financial crisis – become axiomatic. The crisis was an important moment for critical corporate law scholars, who had questioned the axiom all along but now had compelling evidence that shareholder primacy was a terrible basis for corporate governance. Unfortunately, the norm has proven difficult to shake.
One problem, as identified by Blanaid Clarke and others, is the ongoing lack of diversity among board members. The other problem is supplying an alternative to shareholder primacy. Although conference presenters and attendees differed on the details, all agreed that the alternative has to be a norm of environmental sustainability – environmental primacy, if you will. The arguments for environmental primacy are not theoretical: as opening keynote speaker Cecilie Mauritzen confirmed, the climate change facts are telling us that making this change is, to put it crudely, ‘do or fry’. Most conference-goers also agreed that this norm has to become an express aspect of the purpose of the corporation and of directors’ duties; several presentations on Day 1 of the conference, including my own, focused on how to articulate the corporate purpose and directors’ duties to ensure that profits are subject to sustainability, rather than making sustainability subject to maximizing profits.
Day 2 of the conference made clear that amending the corporate purpose and directors’ duties is only one of several pieces of what Sjåfjell has called the jigsaw puzzle of sustainability. The other pieces, presented by scholars from across Europe and beyond, include law and development, insolvency law, contract law, securities law, tort law, insurance law, human rights law, tax subsidies, public procurement rules, takeover bid rules, accounting rules, auditing practices and credit ratings. As a scholar interested in connecting my work to the problem of sustainability, this can be daunting. But the Sustainable Companies Project demonstrates that we need not do it all on our own: there are other clever, creative and like-minded scholars out there with whom to confer and collaborate. Together, hopefully, we can put together this complex jigsaw puzzle, before it’s too late.