traditional response to information asymmetries in financial markets has been to require disclosure and heightened transparency in investment chains. We argue in this chapter that the trust placed in such regulatory techniques will fail to deliver sustainable investment for two reasons. The first is the structure of equity markets, which are focused on shareholder returns and excessive turnover of portfolios, preventing meaningful engagement with companies. The second is that both investors and intermediaries make a category error in placing trust in modern risk management to quantify the financial risks from climate change and other environmental changes. Our analysis leads us logically to three micro- and macroprudential policy prescriptions, namely: increasing the capital requirements on assets with so-called ‘brown’ credentials; reforming bank stress tests to reflect the uncertain financial implications of environmental damage; and pivoting central bank bond buying programmes toward green financial assets.

This chapter explores the role of corporations that participate in global supply chains and specifically the legislation emerging to address the problems that arise in a supply chain context. There is a notable shift from voluntary initiatives towards hard law solutions, in particular disclosure and due diligence requirements. The disclosure measures introduced internationally and nationally only partially contribute to sustainability. Such measures appear limited at best to achieving transparency, and they do not necessarily achieve progress in their substantive outcomes. Due diligence requirements, if backed up by enforcement sanctions, promise greater effect as they call on companies to make efforts to eradicate or mitigate their negative impacts. A key feature of the emerging due diligence will be the collaboration with stakeholders and campaigners acting on their behalf. If successful, these due diligence developments will be a significant contribution to the goals of sustainable development.

Caught between the traditional classifications of ‘insider’ and ‘outsider’ orientation, or ‘liberal’ and ‘coordinated’ corporate governance models, the French approach borrows from both without being firmly attached to either. The French system of corporate governance offers a hybrid model, combining the long-standing maintenance of some entrenched features of French capitalism (employee representation on the board, notably), with an innovative approach to sustainable governance. This chapter examines the corporate law and corporate governance structures of large French companies, including new compliance and due diligence programmes imposed upon companies and their suppliers.

This chapter reviews the accomplishments of the networks that form the periphery, rather than the core, of financial regulation, and places them into the larger context of international financial regulation. It is organized around their roles in the signature post-crisis regulatory institution: The Financial Stability Board’s “Compendium of Standards,” which looks to core principles from networks beyond the Basel Commission, IOSCO, and IAIS that it views as fundamental for a well-working system of financial oversight. The existence of so many financial regulatory institutions, even if some are quite small and amount to little more than task forces within the ambit of the Basel Committee, suggests that financial regulation still remains a task-specific, disaggregated enterprise. Consider, for example, deposit insurance. It is conceivable that the Basel Committee or IAIS could develop principles for effective deposit insurance on their own; deposit insurance contributes to financial stability, which is the raison d’etre of the Basel Committee, and it’s an insurance product that insurance supervisors, in theory, understand (perhaps only in theory – deposit insurance is more commonly thought of as a tool for bank regulators). The fact that Basel and the IAIS haven’t done so is a testament to the regulatory fragmentation of financial oversight.

The interlocking parts of regulatory governance amount to a form of administration. It represents the “agencification” of a previously informal and diverse regulatory process, replete with a degree of political oversight, a bureaucratic middle, and a bottom that has adopted many of the trappings of administrative law to get the work done.

The Islamic finance industry has grown significantly over recent decades and become a contender in the financial market. The defining feature of this industry is its Sharia underpinning, which provides its institutions with a different business model based on profit-loss sharing. This chapter argues that although Islamic governance does not, per se, have an equivalent term to corporate sustainability, it offers a number of key concepts that map onto the overarching themes of corporate sustainability. Salient among these concepts are: the notions of ‘khilafah’, which encompasses vicegerency and trusteeship, and the idea of social unity. However, the existing Sharia governance frameworks of Islamic financial institutions in a number of jurisdictions have some deficiencies that may undermine the advancement of the industry’s sustainability agenda. This argument will be advanced by referring to three key jurisdictions, namely, Oman, Dubai and Malaysia. The Chapter also makes some suggestions to overcome these governance challenges.

This chapter analyses access to remedies and the efficacy of enforcement mechanisms for corporate sustainability norms at domestic and international levels. It argues that meaningful discussion of remedies and their enforcement must centre on affected communities rather than corporations. Achieving full compliance with sustainability norms already poses enormous challenges, and jurisdictional fragmentation is recognised as a particularly formidable obstacle in the context of developing effective, enforceable remedies. In analysing the barriers faced, a taxonomy using two dimensions – hard law versus soft law, and victim-driven versus external-actor-driven – is presented. Principles for community-centred remedies and enforcement are proposed. They include legal empowerment of affected communities and procedures grounded in international standards. Innovatively, these procedures and remedies are envisioned as forward-looking as well as remedial, and flexible but underpinned by strong incentives for business participation. Effective community-centred remedies are also envisaged as holistic and collaborative, rather than splitting victims into atomised groups.

Canadian law adopts the corporate social responsibility model of environmental sustainability. This represents a weak sustainability approach, where environmental sustainability is justified only if there is a net positive impact on a company’s long-term financial performance. Corporate law constraints, such as the duties of loyalty and care, and the oppression remedy, have not traditionally required corporations to consider sustainability. However, courts have begun to move the common law in that direction, expanding the duty owed by the board of directors from shareholders to the corporation as a whole, including a consideration of stakeholder interests. Meanwhile, securities regulators have begun requiring environmental disclosure. Institutional investors, such as pension funds, have adopted climate change policies, and shareholder proposals regularly address environmental sustainability, although both tend to adopt a weak sustainability approach. Overall, under Canadian law, environmental sustainability appears to be important only insofar as it impacts the financial performance of companies.

The purpose of this chapter is to describe how corporate governance mechanisms have been used to promote sustainability in Brazil. A few initiatives and regulations connect the sustainability and corporate governance agendas in Brazil, particularly in the securities market and banking sector, where most progress is found. Brazilian financial and non-financial companies still do not fully recognise that the overarching purpose of the sustainability agenda is to ensure a safe operating space for humanity, given that the progress observed is mainly driven by economic factors, such as the mitigation of socio-environmentally risks related to financial and reputational damage and the attraction of foreign investors. Despite the progress observed in recent decades, the chapter concludes that fast or deeper developments should not be expected in the near future due to the strong political influence of agribusiness interests.

Multinational enterprises operate in an increasingly international environment and their operations are subject to a variety of rules from both hard and soft law. They take advantage of weak accountability systems and poor law enforcement in developing countries, necessitating a better understanding of the most appropriate hard-law approach to regulate them and address business sustainability challenges. Despite the division between the hard and soft legislative approaches used to address extraterritorial challenges, current efforts have been criticised primarily regarding their impact and enforceability. This chapter explores possible approaches for better extraterritorial regulation of corporate sustainability, including more detailed and extended directorial duties, together with enforcement measures driven by the state. Such efforts may direct board members’ attitudes towards more active involvement with extraterritorial corporate sustainability challenges.

This article explores how the current corporate governance codes in Nigeria affect corporations in the extractives sector. It focuses on the idea of corporate sustainability as the root for improving firms’ behaviour, incorporating development and social justice perspectives. Since the discovery of oil in Nigeria, several laws have been enacted to control the impact of oil exploration on the environment. Despite these efforts, environmental degradation continues to persist in parts of the country where natural resources are exploited. Mandatory corporate governance codes backed by sustainability driven corporate laws could ensure that companies minimize adverse effects of their activities on affected stakeholders.

New Zealand’s image as clean and green and a fair society is core to its identity. Yet despite the rhetoric, sustainability considerations are not yet central to its corporate governance. Shareholder primacy thinking by some regulators, commentators and boards has hampered attempts to encourage companies to prioritise sustainability despite the Law Commission vision that the New Zealand company operate as an enterprise. This chapter focuses on regulatory approaches to corporate governance and sustainability in New Zealand, first through the various codes and then with a discussion of the means and ends of its corporate governance. It is argued that the means are through the board and the ends are to act in the best interests of the company, conceived of as an enterprise, concluding that there is potential for genuine sustainability when the best interests of the company are considered from the perspective of the entity itself.

Standing in the way of sustainable business efforts is the belief that corporate fiduciaries must work to maximize shareholder wealth at all costs. American corporate law in fact imposes no such obligation, yet shareholder wealth maximization remains a powerful social norm. This chapter explores the history of the shareholder primacy norm, tracing the idea from its inception, to its famous articulation in the classic case of Dodge v. Ford, through the influence of the law and economics movement and the rise of financialism at the end of the last century. The chapter then examines the current debate over shareholder primacy, sustainability, and corporate social responsibility, arguing that shareholder primacy has peaked in the United States and is meeting resistance internationally. A new norm of enlightened stakeholderism, I argue, is on the rise, pursuant to which firms aim to be not just profitable but environmentally and socially responsible, as well.