Sustainable Corporate Governance: Trimming or Sowing?

Abstract

This chapter traces two conceptual perspectives on sustainability through current reform proposals for more sustainable corporate law and governance. From the viewpoint of ‘sustainable capitalism’, these reforms require adaptation of existing economic and corporate systems and their operating principles to ensure sustainable economic growth and socially embedded global markets. This perspective assumes that, much like we might trim a hedge or tree to adjust it to its environment, so we must regulate our established (corporate) systems to align them with political concerns for greater sustainability. A ‘sustainable systems’ perspective, on the other hand, insists that the scope and urgency of sustainability challenges today require more fundamental systemic revisions, including of the growth objective itself. In other words, rather than trimming a hedge or tree – a process of curbing excess through intervention – this view encourages that we should sow, and grow, alternative seeds (operating principles) that will yield alternative corporate organisms (systems). The chapter argues that while express linkages between corporate governance and sustainability are a relatively recent phenomenon, these conceptual distinctions are central to the framing of sustainable corporate governance reform.