Sustainable Public Procurement as a Driver for Sustainable Companies? The Interface between Company Law and Public Procurement Law

Abstract

This chapter discusses the relationship between public procurement and company law within the context of the overarching EU objective of sustainable development. The EU recognises the importance of business to achieve sustainability and the relevance of public procurement law as a policy strategy instrument in this context, but it does not yet fully recognise the importance of company law. Reform of public procurement law is seen as an essential part of the EU’s 2020 Strategy, with public procurement being mentioned several times: as a potential driver to stimulate innovation and resource-efficiency, and as an integral part of an industrial policy for a global, low-carbon economy. While public procurement is also mentioned as a tool to ensure efficient use of public funds, company law is only regarded in the economic context, as something to be simplified to facilitate single-market access for SMEs and encourage entrepreneurship. However, company law does have a crucial role to play in the transformation towards sustainability because it provides the legal framework for the internal workings of the company, including its decision-making. Indeed, the argument can be made that without a reform of the legal infrastructure for the internal decision-making in companies, sustainability is very difficult, if not impossible, to achieve.

This Chapter draws on a research-based reform proposal for EU company law and corporate governance. The Chapter proceeds with a brief presentation of the reform proposal for sustainable companies and discusses the potential role of public procurement in that context. On this basis the Chapter considers whether ideas from the reform proposal can be promoted by public procurement as a potential front-runner and a driver for the necessary transformation of business, identifying possibilities but also significant limitations. The Chapter then goes on to discuss whether there are any lessons to be learned for public procurement from the insights derived from international company law research on how to internalise environmental and social externalities in the decision-making in companies; and conversely whether innovative approaches in the new public procurement directives can inspire a further development of the reform ideas for company law itself. The chapter concludes with some reflections on the interaction between public procurement law and company law.