Professor dr. juris Beate Sjåfjell

Sustainable Companies & Climate Change

@BeateSjafjell

Planetary boundaries(Rockström et al 2009, Steffen et al, 2015)& What is realistic?

«Living within the dougnut»Kate Raworth, 2012

Companies from a shareholder perspective

Shareholders

Company

Stakeholdersincluding employees

Companies from a typical CSR perspective

The company

Employees External workers

Environ-ment

Globaldevelopm.

Local community

Other employees

Management

BoardCompany

Share-holders

BanksOther

sources offinanceSuppliers

Other creditors

(Localauthorities)

Customers (clients, patients, pupils)

Sources offinance

Othercontractual

parties

CG

External workers

Global community

Company

CompanyCompany

Company

Company

Company

Company

Companies can be organised in groups

Who controls companies?

Bjarnadottir, Margret and Hansen, Gudmundur Axel, 2010, SIC report, Vol. 9, Appendix 2, pp. 23 - and Johnsen, G., 2014, Bringing Down the Banking System: Lessons from Iceland, Palgrave-Macmillan.

… may be difficult to unravel

Bjarnadottir, Margret and Hansen, Gudmundur Axel, 2010, SIC report, Vol. 9, Appendix 2, pp. 23 - and Johnsen, G., 2014, Bringing Down the Banking System: Lessons from Iceland, Palgrave-Macmillan.

Companies and Sustainability

• The company is an ingenious invention– Channelling capital to entrepreneurs– Creating value for investors, employees and society

• «Business as usual» is not an alternative– Societal challenges require sustainable companies– Voluntary shift towards sustainability too slow– Competitive advantage for unsustainable companies

• The Sustainable Companies Project investigated legal infrastructure for companies & corporate decisions

Results of comparative analysis of Sustainable Companies Project• Shareholder primacy the main barrier• Inadequate reporting requirements• Reg. of groups: gap control & responsibility• What we need to do:

– move beyond CSR and mainstream CG approach– achieve a better interaction between external

regulation and the internal company law

• Identified barriers indicates reform level & direction

A Legal Framework for Competitive, Sustainable Companies

• Redefine the corporate purpose:– creating sustainable value within the planetary boundaries while

respecting the interests of its investors and other involved parties

• Redefine the duty of the board:– To promote life-cycle-based sustainable value creation – Includes group issues & supply chain

• Operationalise through long-term, life-cycle-based business plan; key performance indicators to report on

• Supportive areas: financial market rules, public procurement, state aid, etc.

EU Company Law & Sustainability today

• Certain convergence tendency between corporate governance and CSR

• Short-termism seen as problematic• Risk-management focus includes CSR

• Still shareholder primacy• Still no clear CSR duties• Limited scope of CSR reporting requirement• Lack of proper auditing and enforcement

Sustainable Development in EU Law

• Overarching global societal goal• Strong legal position in EU Treaty Law

– Overarching objective of the EU, Art. 3(3) & 21(2)(d) & (f) TEU

– Emphasis on human rights & fundamental social rights

– Principle of sustainable development– Codification of core in rule in Article 11 TFEU

• EU law has legal basis for necessary changes

The Norwegian Constitution & Sustainability

• Increasing tendency for constitutional protection of the environment & human rights

• Norwegian constitution, new chapter on HR• Especially about Article 112: environment & HR

– 1987: Our Common Future– 1992: Right to a liveable environment where

biodiversity is protected, also for future generations. Duty for the state

– 2014: Amendment to clarify duty for the state to «undertake adequate and necessary action» to secure our right to a liveable environment

– What does this mean for the Norwegian state?

From Sustainable Companies to Sustainable Market Actors For Responsible Trade (SMART)

• SMART goal: contribute to transition to low-carbon, environmentally & socially sustainable societies

• Building on SC results; broadening & deepening• Our factual starting point:

– EU company selling products to EU consumers– Products have international life cycle involving also least-

developed countries

• International law, EU law, law of select jurisdictions• Interdisciplinary project: requires a broad and

heterogenous research team

More information & stay in touch!

• Info on SC Project and register interest for SMART: jus.uio.no/companies (under Projects)

• Current and forthcoming publications:– A number of papers, including special issues of ECL (under Publ.)– The Greening of European Business under EU Law, Sjåfjell &

Wiesbrock (eds), Routledge, 2015 (Nov -14)– Company Law and Sustainability, Sjåfjell & Richardson (eds),

Cambridge University Press, April/May 2015– Sustainable Public Procurement, Sjåfjell & Wiesbrock (eds),

forthcoming end 2015

E-mail: b.k.sjafjell@jus.uio.no

LinkedIn: Beate Sjåfjell; Facebook: Beate Sjåfjell

@BeateSjafjell