The introduction sets out the parameters of this book, which brings together contributions from experts from a range of academic disciplines, with legal scholarship at the core of the volume. It presents the context for the book’s focus upon sustainable value creation and explores how this might be developed inside the EU and through the EU’s institutions. The volume is positioned within a research-based concept of sustainability, defined as securing social foundations for humanity now and for the future within planetary boundaries. This provides the basis for the analyses of the potential for sustainable value creation in the EU. The introduction goes on to identify a number of mileposts that have shaped the progress of the EU and its relevance for value creation, including the EU’s ambitions, the financial and debt crises, Brexit and the urgent challenges presented by the COVID-19 pandemic and the broader environmental, social and economic aspects of sustainability. The contributions of the volume are briefly introduced, before the chapter concludes with hope and optimism, setting the tone for the critical and constructive analysis to follow.

The conclusion higlights continuing challenges for the EU and the rest of the world and how the future humanity faces is uncertain. Yet an optimistic message is also presented. Noting that shareholder primacy is increasingly coming under question and a growing interest in the concepts of corporate purpose and sustainable value creation, the conclusion draws upon the suggestions made among the chapters throughout the book to highlight the potential for corporations to be a force for good if supported by more effective legal and regulatory reforms and operating with more innovative structures and technologies. More stable, resilient and democratic institutional structures are necessary too as is the inclusion of active political and entrepreneurial women. Also fundamental to change is setting sustainable value creation within planetary boundaries as an overarching purpose for business, with mandatory rules to ensure that sustainability is integrated into the governance of business across global value chains. In a policy coherence for sustainability perspective, the book concludes by positioning the research-based reform proposals for business and finance within broader European Union laws and policies, underlining the necessity of reform also of other related areas, including circular economy policies, competition and state aid law and public procurement.

This chapter discusses how to integrate sustainable value creation corporate governance, through company law, corporate governance codes and corporate documents, notably the companies’ constitution. Currently, all of these, law, codes and constitutions, tend mainly to limit themselves to regulating the relationship between the board, senior management and shareholders, making minimal reference to the existence of and crucial contributions by other involved parties and affected interests comprising the business. Potentially laws, codes and constitutions can be remodelled in order to integrate sustainability into the governance of business. The chapter analyses the emerging concept in company law and corporate governance of sustainable value creation and positions this within a research-based concept of sustainability. On this basis and drawing on a decade of collaborative research, we suggest how sustainable value creation within planetary boundaries could be integrated through company law reform. We discuss how this could be followed up through reform of corporate governance codes, as a support for a law reform or as an alternative way to promote sustainable business while waiting for a legislative reform. Finally, we explore how the potential of integrating sustainable value creation in company constitutions can contribute to shifting business towards sustainability.

Introduction

Climate change is a global crisis, largely resulting from human action, that threatens the continued existence of human, animal and plant life on the planet and requires a global solution in response (Vitousek and Mooney, 1997; Spratt and Dunlop, 2018). The Special Report on Global Warming, published by the Intergovernmental Panel on Climate Change (IPCC, 2018), highlighted the urgency of the need to reduce carbon emissions by approximately 45%, in order to limit global warming to 1.5°C above pre-industrial levels by 2030, to be cut to zero carbon by 2050. This lends support to the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs) of 2015, especially SDG 13, on urgent action to combat climate change. SDG 13 highlights the relevance of climate change for sustainability. Indeed, the United Nations (UN) observes that climate change ‘presents the single biggest threat to sustainable development everywhere and its widespread, unprecedented impacts disproportionately burden the poorest and most vulnerable’. This observation leads the UN to conclude that ‘urgent action to halt climate change and deal with its impacts is integral to the successful implementation of the Sustainable Development Goals’ (UN, nd).

That evidence also makes even more imperative acceptance of the message of the Paris Agreement 2015, which came into force in November 2016, calling for an internationally coordinated effort to tackle climate change. Although, as a primarily soft law instrument, it has weaknesses (Rajamani, 2016; Lawrence and Wong, 2017), the contribution of the Paris Agreement is that it highlights the need, urgently, to strengthen the global response to the threat of climate change and to eradicate poverty. The Paris Agreement sets out commitments to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels, to increase the ability to adapt to the adverse impacts of climate change and to foster climate resilience and low greenhouse gas emissions development. Some scientists suggest that these measures might not be enough to stem the accelerating climate impacts or prevent us passing the critical thresholds that threaten catastrophe (Spratt and Dunlop, 2018: 1), but the Paris Agreement does enable us to appreciate the enormity of the challenge climate change presents.