The EU Sustainable Governance Consultation and the Missing Link to Soft Law

The EU Sustainable Governance Consultation and the Missing Link to Soft Law

Guido Ferrarini, Michele Siri, Shanshan Zhu

Series number :

Serial Number: 
576/2021

Date posted :

April 13 2021

Last revised :

April 13 2021
SSRN Share

Keywords

  • sustainable corporate governance • 
  • soft law • 
  • Corporate Governance Codes • 
  • short-termism • 
  • Directors’ duties • 
  • Sustainable Finance • 
  • Corporate governance • 
  • corporate social responsibility • 
  • Shareholder primacy • 
  • shareholder value • 
  • shared value • 
  • social value • 
  • Stakeholder Theory • 
  • stakeholder governance • 
  • stakeholder capitalism • 
  • Sustainability

In this paper, we investigate whether reform of EU company law is needed to make corporate governance more sustainable through an analysis of some of the key questions found in the European Commission’s questionnaire in its public consultation on sustainable corporate governance.

We also consider some issues, which the Commission paid scant attention to in its questionnaire, such as the role of corporate governance codes and other types of soft law, mainly of international origin, in promoting sustainable governance. In addition, we underline that the EU legislator has adopted several measures in recent years, which offer better prospects for sustainable governance than the reform of directors’ duties the Commission is currently planning. We conclude that the failure to take corporate governance codes and the existing regulatory framework into account could seriously impair pending reforms of directors’ duties and their link to sustainability.

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