Shareholder Primacy: The Main Barrier to Sustainable Companies

Abstract

This investigation of the barriers to, and opportunities for, promoting environmental sustainability in company law provides an in-depth comparative analysis of company law regimes across the world. The social norm of shareholder primacy is the greatest barrier preventing progress, and it also helps explain why voluntary action by companies and investors is insufficient. By deconstructing the myth that shareholder primacy has a legal basis, and challenging the economic postulates on which mainstream corporate governance debate is based, this chapter reveals a surprisingly large, unexplored potential within current company regimes for companies to reorientate themselves towards sustainability. Together with other chapters in the same book, this chapter also suggests possible methods of reforming the existing legal infrastructure for companies and provides an important contribution to the broader debate on how to achieve sustainability.