Human rights and environmental issues have often been approached from the
angle of Corporate Social and Environmental Responsibility (CSR). This is a
concept according to which, in essence, the corporate purpose extends
beyond creating shareholder value by encompassing social and environmental
issues. From a corporate law perspective, the initial question in this
context is what the role or purpose of corporations in society is: whether
to only focus on shareholder wealth, or whether to also have regard to
other stakeholders' interests, including the interest in a healthy
environment or, more drastically, a livable planet for future generations.
Despite the widely acknowledged need for substantial measures to prevent
the most disastrous effects of climate change, binding "hard law"
obligations on corporations to reduce their greenhouse gas (GHG) emissions
are scarce, sector specific and arguably non-efficient, considering the
still rising levels of global GHG emissions.
While climate change has typically been viewed as an issue to be addressed
primarily at the intergovernmental level, more recently, a new focus on the
role of the private sector in achieving global GHG emissions reductions has
Corporate responsibility in the climate change context increasingly
attracts the attention of scholars, policymakers and society. This begs the
question how to contextualize this new legal issue within the existing
legal landscape, whilst also having regard to current market developments
in the area. To this end, the authors propose the term Corporate Climate
Responsibility (CCR) as a means to capture and contextualize various
climate change related trends in the legal sphere as well as changing
With a particular focus on environmental protection, the first part of the
article (II) analyzes the evolution from corporate governance to CSR,
including the revisiting of the corporate purpose, the broadened
foundations of CSR, and the trend towards the "hardening" of soft
law. Sketching the contours of CCR, the second part (III) outlines the
rationale for introducing CCR by formulating three hypotheses and then
discusses the main drivers of the new focus on climate change in the
corporate world, the business response to the regulatory framework as well
as key elements and the legal quality of CCR.
II. From Corporate Governance to Corporate Social and Environmental
1. Increased Importance of Governance
The term "governance" can be traced back to the Greek word
"kybernetes", the "steersman", and the Latin word
"gubernator". These historical roots lead to the English notion
"governor" and therefore relate to aspects of steering or
Already in ancient Greece, entrepreneurs and traders had certain
responsibilities towards their community.
The governance discussion first started out in the private domain under the
well-known concept of corporate governance. Companies are expected to
implement structures that allow them to comply with the given allocation of
duties and responsibilities. During the last 20 years, many corporate
governance codes and guidelines have been developed. Nonetheless, the term
corporate governance is only rarely reflected in legal statutes of national
legislators. But the concept has expanded to further regulatory structures,
including the public sector, both at the national and the international
Today, companies are considered (at least in academia) not only as
economic, but also as social actors. Consequently, the term corporate
governance has been broadened and further developed into the concept of
Describing CSR, the European Commission originally referred to a
"concept whereby companies integrate social and environmental concerns
in their business operations and in their interaction with their
stakeholders on a voluntary basis".
Such framing of CSR as a voluntary endeavour received criticism
due to its tendency to prioritize shareholder wealth over environmental and
Accordingly, the term CSR was further developed and refined to encompassing
companies' responsibility for their impacts on society and the environment.
To fully meet their CSR, companies "should have in place a process to
integrate social, environmental, ethical, human rights and consumer
concerns into their business operations and core strategy in close
collaboration with their stakeholders".
As a consequence, governance gained wider importance in the corporate law
CSR compliance attempts to implement and supervise mechanisms which have
the objective to achieve values and reputation through behavioral
processes. In particular, businesses are expected to observe social and
environmental objectives, demonstrate a high level of integrity and
transparency, and thereby enhance social welfare.
The word "responsibility" is linked to the conduct of the company
in the market, encompassing its relationship to employees and customers as
well as its commitments to applying ethical behavior.
Relevant aspects are respect, integrity, communication, and excellence.
2. Revisiting the Purpose of the Company: Respect for the Environment?
Traditionally, the purpose of the company is expressed in its articles of
association and, therefore, determined by the shareholders. Over the last
two decades, often challenging Friedman's statement that the only, or at
least primary, purpose of the company consists in increasing its profits, a myriad of papers have discussed the potential purposes of a
corporation. While it is increasingly acknowledged that a company is
"a moral organism with social and ethical responsibilities",
some scholars argue that the maximization of shareholder value as the sole
purpose of a corporation rests on faulty assumptions and is "to a
great extent incorrect as a matter of law".
The wide range of stakeholders whose interests ought to be considered
includes employees, customers, and suppliers but also communities and other
stakeholder groups, for example civil society, and - critical in the
climate change context - the environment.
Accordingly, CSR encompasses both social and environmental responsibility.
More consideration to environmental concerns is also reflected by the
"triple bottom line", a concept introduced in the nineties,
according to which companies should realize three objectives: (i) profit
optimization in the interest of the shareholders, (ii) socially and
ethically responsible behavior in the interest of the employees and civil
society, as well as (iii) resources-saving in the interest of environment
Partly, self-regulatory guidelines have taken up this idea. For example, in
its current version, the German Corporate Governance Codex states that
social and environmental factors have an influence on entrepreneurial
A new vision of corporations calls for a radical reform of the concept of
corporations, their business objective, roles and responsibilities.
Mayer proposes the term "enlightened corporations", referring to
corporations which deliver their stated purpose by integrating and
balancing the six components of capital: human capital, intellectual
capital, material capital, natural capital (i.e., the environment, land and
nature), social capital, and financial capital.
This concept encompasses a much wider range of interests than is usually
considered in business practice, given that presently, corporations only
report their net worth in relation to their financial and material capital,
but not in relation to the other four components of capital.
With respect to natural capital in particular, Mayer states that
"[t]here is one form of capital that the corporation has not produced
at all to date and which, on the contrary, it has consumed voraciously, and
that is natural capital. One of the reasons why we stand on the precipice
of environmental disaster is its failure to do so."
Going beyond a scholarly debate, CSR narratives have reached board rooms.
In August 2019, the Business Roundtable, a group of leading US chief
executives, issued its revised "Statement on the Purpose of a
Corporation". The statement highlights that each of a corporation's
stakeholders - which are delineated as including customers, employees,
suppliers, communities and shareholders - is "essential", and
contains a (vague) commitment to environmental protection by a reference to
"embracing sustainable business practices".
This expression of view gained widespread attention because it implicitly
challenges the common social norm of shareholder primacy.
Shortly after, the World Economic Forum published a manifesto urging
companies to move away from the model of "shareholder capitalism"
as realized in most Western economies to "stakeholder
capitalism", a model which positions private corporations as
"trustees of society" in response to today's social and
Yet, although the stakeholder movement has become quite strong, empirical
evidence analyzing the behavior of leadership in corporations is not very
Further, private sector references to the need to protect the environment
are (more often than not) characterized by being vague or by being framed
as "aspirational goals", leading to criticism accusing such
practices of "greenwashing".
3. Broadened Responsibility Concepts
Traditionally, international law is understood to be applicable only to
Nation States, but typically not (directly) to businesses and other private
actors. Yet, over the last two decades, its influence has also grown for
so-called horizontal relations between commercially acting entities.
The fact that multinational corporations are operating across national
borders calls for efforts to fill the so-called regulatory vacuum effect
caused by the limitation of national governments' power to their localized
The United Nations has been a key driver of attempts to implement
environmental, social and governance (ESG) issues into the objectives of
corporations and institutions. Focusing in particular on investors, a 2019
report commissioned by the UN Environment Program Finance Initiative (UNEP
FI) held that according to empirical and academic evidence, ESG issues are
and must therefore be incorporated into investment analysis and
The recognition of materiality is a paradigm change, considering that ESG
issues were typically perceived as largely "immaterial" on a
Implementing this new understanding, the UN Principles for Responsible
Investment (UN PRI) provide six principles for integrating ESG issues into
Companies are expected to incorporate environmental and social
responsibility into their decision-making processes as part of a balanced
assessment of business risks and opportunities.
The perceived lack of corporate accountability with respect to social and
environmental issues increasingly prompts calls for regulation. For
instance, in December 2019, dozens of legal scholars signed a statement
entitled "Corporate Governance for Sustainability" suggesting the
introduction of a legally binding obligation for directors to
"develop, disclose and implement, on behalf of the company, a
forward-looking corporate sustainability strategy that identifies and
addresses material environment and social issues and significant impacts
connected to the company's business model, operations and supply
Further, among other related regulatory projects, the European Commission
has recently launched an initiative to improve the European Union
regulatory framework on corporate governance and company law, aiming to
"better align the interests of companies, their shareholders,
managers, stakeholders and society".
Legal literature points to the ability of already existing laws and legal
concepts to adapt to changed circumstances and societal priorities with
regard to climate change.
According to Clarke, the scope of directors' duties has broadened over the
last few years due to the impact of international, national, market,
business and civil society campaigns for corporate social and environmental
4. Hardening Soft Law Standards
The issue of classifying CSR guidelines has caused controversy amongst
legal scholars. Should CSR frameworks formally be qualified as "hard
law", "soft law", or rather as a hybrid form composed of
various co-existing regulatory approaches?
This discussion leads to the following question: to what extent can
normative provisions be developed outside traditional forms of
international and national legal sources (such as treaties, constitutions,
regulations, etc.)? Indeed, CSR can go beyond the law, be brought through the law, or serve as a control mechanism for the
In order to overcome the partly ambiguous character of CSR guidelines, new
theories have been developed in order to extend an increased legal quality
to such guidelines.
Soft law can be described as "non-binding rules that have legal
consequences because they shape states' expectations as to what constitutes
In the last two decades, soft law gained substantial importance. Due to
fast-moving societal developments, an easy and informal development and
application of standards would seem desirable. Generally, the reliability
of soft law depends on its acceptability in the concerned community.
Indeed, rules created by stakeholders can be efficient since they respond
to real needs by mirroring the aims of society. Meaningful self-regulation
provides the opportunity to adapt the regulatory framework to the
ever-changing environment in a flexible way.
The positive aspects of soft law must, however, be balanced against
substantial drawbacks. Voluntary guidelines risk being ineffective for lack
of enforcement measures and thus dependency on companies' willingness to
adhere to them.
A related risk is the possibility of companies claiming to be compliant
with certain guidelines (for instance, the UN PRI) without actually
implementing them, given that non-compliance does not have serious
The traditional dichotomy between hard law and soft law must be overcome.
Even if some of its weaknesses cannot be overlooked (in particular, with
respect to limited enforcement measures), soft law is suitable to be
applied intelligently and promptly to deal with changing circumstances.
Notwithstanding the fact that a universally accepted theory as to the legal
quality of private rule-making has not yet been developed, it can be said
that soft law often affects behavior and might in time solidify into hard
law, meaning that soft law is apt to be transformed or transplanted into
Soft law also shapes the expectations and decisions of global actors
participating in international relations. Such kind of development
particularly occurs if private rulemaking is supported by governmental
inputs in any form of co-regulation. The respective models are designed in
a way that the government implements the general framework which is then
developed further by the private sector. Indeed, the behavior of
multinational corporations being governed by governmental guidelines and by
CSR rules can determine the manner in which activities of businesses are
In light of the foregoing, turning to the global issue of climate change,
the following discussion of corporate responsibility in the climate context
needs to address the soft law impacts on corporate duties.
III. Corporate Climate Responsibility: Contours of a New Governance
1. Introducing CCR: Three Hypotheses
Introducing CCR rightfully raises the question why such a new term or
concept would be helpful or necessary in the first place. Three hypotheses
form the basis for the rationale:
The international legal framework on climate change provides a point of
reference for corporations in terms of response measures (see below III.3).
The increasing recognition of significant business risks linked to climate
change as well as emerging litigation contribute to pressure on
corporations (see below III.4). These developments are complemented by
discussions with respect to a broadening of a corporation's responsibility
towards society and the environment (see above II.2, II.3, below, III.5).
3. The Business Response to the Regulatory Framework
In 2015, two important milestones in terms of global sustainability policy
were achieved: the
UN 2030 Agenda for Sustainable Development
, which sets out 17 Sustainable Development Goals (SDGs), and, more importantly in the climate change context, the Paris Agreement.
The goals of the Paris Agreement consist of limiting global temperature
increase at "well below" 2°C or preferably 1.5°C above
pre-industrial levels (art. 2[a]), adapting to a
warming world (art. 2[b]), as
well as aligning finance flows with the first two goals (art. 2[c]). Although legal
obligations for corporations to limit or reduce their GHG emissions cannot
easily be drawn from them, both the SDGs as well as the Paris Agreement
have at least been echoed by the private sector. Companies and business
organizations have voiced broad support for the SDGs and the Paris Agreement, albeit mostly in
terms of statements, "commitments" and initiatives with unclear
legal value. For instance, members of the Net-Zero Asset Owner Alliance, a
United Nations convened group of large institutional investors representing
trillions in assets under management, "committed" to
transitioning their investment portfolios to net-zero GHG emissions by
2050, including by establishing intermediate targets every five years in
line with the Paris Agreement.
Another impetus for more business attention to climate change is the
expectation of a tightening of the relevant regulatory frameworks
This is particularly the case for the European Union, where efforts are
currently underway to integrate sustainability (to include climate change
considerations) into corporate decision-making by way of new regulations,
mainly (but not only) in the financial sector (see also below, III.4).
4. Climate Change as a Business Risk
From a business perspective, climate change risks are commonly divided into
two main categories: physical risks and transition risks.
Physical risks arise from climate-related events, whether "acute"
(e.g., bushfires) or "chronic" (e.g., ocean acidification).
Transition risks relate to the global transition to a
"lower-carbon" economy and encompass five sub-categories, namely
(i) policy risks arising from the expected tightening of the relevant
regulatory frameworks (e.g., increasing CO2 taxes); (ii)
litigation risks due to climate change litigation (against corporations);
(iii) technology risks from breakthroughs in 'clean' technologies; (iv)
market-related risks from changes in consumer behavior; and (v) reputation
risks arising from public pressure.
Numerous international financial institutions, central banks and
international organizations have recently highlighted the need to put more
emphasis on climate-related risks. For instance, in its 2020 "Green Swan" report, the
Bank for International Settlements identified climate-related risks as
"potentially extremely disruptive events that could be behind the next
systemic financial crisis" and stressed the need for central banks to
integrate these risks into financial stability monitoring.
Serious concerns over the impacts of climate change on the economy have
prompted the launch of the Network of Central Banks and Supervisors for
Greening the Financial System (NGFS) in 2017.
As regards regulators and supervisors at the national level, authorities in
a number of countries including the United Kingdom, Australia, and France
have communicated specific climate change expectations to market
participants in their respective jurisdictions.
Investors, in particular institutional investors such as pension funds and
large asset managers, are key drivers of the trend towards more regard for
climate change-related issues. A number of investor coalitions and
initiatives have been formed, some of which in cooperation with
international organizations (see above, III.3).
Notwithstanding the fact that many companies as well as investors are aware
of the significant economic effects of climate change, indications that the
respective climate-related risks are currently not sufficiently recognized
cannot be overlooked. Consequently, these risks are not adequately
reflected in asset prices, which exposes corporations and investors to
so-called risks of "stranded assets", that is, sharp and sudden
value losses in fossil fuel assets.
Practice has also shown the rise of climate change litigation against
Lawsuits are brought in particular where it is claimed that a lack of
sensitivity for climate change aspects has led to a drop in share prices or
even bankruptcy (constituting a damage for shareholders or creditors), or
where historical contributions to climate change have allegedly caused
damage to a third party not related to the corporation.
While climate change litigation against corporations first emerged in
jurisdictions of the common law (mainly the United States, the United
Kingdom, and Australia), recent years have seen the first cases in European
civil law jurisdictions (in particular, the German tort case Lliuya v RWE).
Climate change litigation against private corporations in Europe is,
however, still in its infancy.
5. Key Elements of CCR: Disclosure and Due Diligence
Governance relates to the responsibilities imposed on corporate
decision-makers in most legal systems around the world. Fiduciary duties
are the core framework governing the discretion of directors in common-law
jurisdictions, and are typically expressed in equivalent statutory
provisions in civil law countries.
As one of the two key elements (the other being the duty of loyalty), the
duty of care requires members of the board to act on a fully informed
basis, in good faith, and with due diligence and care.
Generally, the duty of care is a standard of reference which is the
behaviour that can reasonably be expected from a prudent person under the
given or comparable circumstances.
This standard is not static, but evolves as society changes and in response
to the need for a transition to an environmentally, economically and
socially sustainable financial system.
Accordingly, a corporation's strategic response to climate change must
include a robust engagement with its fiduciary duties and other governance
While narrower, traditional framings of the corporate purpose tend to focus
on shareholder wealth maximization, newer conceptions give way to a broader
set of emerging duties which are not only owed to shareholders but to a
more comprehensive group of stakeholders (see above, II.2, II.3).
This widening scope of corporate decision-makers' duties includes a
responsibility to give adequate weight to climate change risks, given their
Grasping the interplay between corporate governance and climate change
requires an understanding of what corporate duties demand from business
leaders in the face of this systemic environmental risk.
Corporate duties mandating greater attention to climate change are, by and
large, non-existent or at least rather vague or general in nature.
Accordingly, the fast emergence of soft law dealing specifically with
climate change related issues is apparent. In this context, the work of the
Task Force on Climate-Related Financial Disclosure (TCFD) is particularly
important. This industry-led expert group was initiated by the Financial
Stability Board in December 2015 in order to develop recommendations for
consistent disclosures to assist financial market participants understand
material climate-related risks.
Two core elements of CCR can be identified: transparency and due diligence.
First, a sound understanding of the impacts (both current and anticipated)
of climate change on a specific company is required. The TCFD recommends to
apply a so-called scenario analysis, which entails a process of (1)
ensuring that adequate governance is in place, (2) assessing materiality of
climate-related risks, (3) identifying and defining a range of scenarios,
(4) evaluating business impacts (on operating costs, revenues, supply
chains, etc.), (5) identifying potential responses, and (6) documenting and
In 2017, the TCFD presented detailed recommendations on climate-related
disclosures (hereinafter "TCFD Recommendations") that are applicable to
organizations across business sectors (including the financial sector) and
The TCFD Recommendations are structured around four thematic areas that
stand for the main elements of how corporations operate: governance,
strategy, risk management, and metrics and targets.
Importantly, the transition to a lower-carbon economy not only entails
risk, but also offers significant business opportunities which should
equally be assessed in the processes described.
The second core aspect of CCR relates to due diligence. The concept of due
diligence to identify, prevent, mitigate and account for harmful corporate
impacts on human rights and the environment was promoted by the 2011 UN
Guiding Principles on Business and Human Rights (UNGPs) and then
incorporated into the 1976 OECD Guidelines for Multinational Enterprises
to expressly extend to other areas of responsible business conduct such as
environment and climate change, bribery, and consumer rights.
In Chapter VI on the environment, the OECD Guidelines recommend that
companies establish and maintain an environmental management system. While
not expressly referring to climate change in the current 2011 version, the
OECD Guidelines encourage improving corporate environmental performance at
the level of the enterprise and, where appropriate, of its supply chain.
This shall be done, among other things, by developing products and services
that reduce GHG emissions and by promoting awareness among customers of the
environmental implications of the products and services offered through
accurate information on GHG emissions (and other environmental issues such
Countries adhering to the OECD Guidelines are under an obligation to
establish National Contact Points (NCPs), to which complaints alleging
breaches of the guidelines can be made; the OECD Guidelines are therefore not a purely voluntary instrument.
Indeed, climate change cases have already been filed with OECD NCPs. The
Netherlands NCP, in April 2019, clarified that under the OECD Guidelines,
companies are expected to conduct climate change due diligence both with
respect to their own emissions as well as regarding emissions along the
Acknowledging transparency as one way to incentivize companies to do no
harm, embedding sustainability issues (including climate change) into
corporate duties of care is arguably a more effective way to enhance
responsible corporate behavior.
Nevertheless, compared to disclosure, due diligence has so far received
less attention in the climate change context. Although large companies
commonly assess environmental impacts, including climate change, in their
due diligence, the term "climate change due diligence" is so far
rarely used, and human rights and climate change processes are often
limited to their respective "silos".
International climate-related soft law standards are beginning to
"solidify" into hard law. The first "wave" of this
development relates to disclosure standards. For instance, in September
2020, New Zealand announced to make climate-related financial disclosures
mandatory for some organizations including larger financial institutions,
in line with the TCFD Recommendations.
The European Union started to incorporate the TCFD Recommendations into its
regulations and guidelines.
In contrast to disclosure, where the TCFD Recommendations provide a rather
detailed and climate-specific framework, a comparable climate due diligence
framework does not exist. In most countries, there currently is no general
duty on companies to undertake due diligence for their environmental (and
human rights) harms, but this is changing. For instance, in 2017, France
introduced mandatory due-diligence requirements with respect to the social
and environmental impacts (implicitly including climate change) of the
operations of large French companies.
In 2020, building on the UNGPs and the OECD Guidelines, the European Union
announced plans to propose new mandatory human rights and environmental due
diligence legislation. In Switzerland, in November 2020, a popular
initiative which would have imposed stricter rules (including due diligence
and liability) on large Swiss based corporations in terms of human rights
and environmental standards failed by a very narrow margin, nevertheless
paving the way for mandatory disclosure requirements.
6. Legal Quality of CCR
Although there is no generally valid legal qualification of CSR standards
(see above, II.4), guidelines such as the TCFD Recommendations and the OECD
Guidelines are in principle suitable to be used to specify a certain level
of care expected under openly framed concepts such as duties of care.
As soon as such guidelines are referred to in the context of interpreting a
legal duty, compliance with them becomes a matter of "hard law",
even if their legal character is not part of the traditional normative
While the issue of liability has been discussed primarily in the field of
human rights violations, an increasing body of literature analyzes concepts of climate change
Soft law standards assisting to make the scope of openly framed corporate
duties more specific gain importance in practice and contribute to the
"hardening" of such guidelines.
In any event, even with a relatively narrow conception of the corporate
purpose, sound governance demands attentiveness to and action on climate
As a result, corporations are confronted with new expectations in the
execution of their activities. In particular, a number of legal scholars
argue that in the discharge of their fiduciary duties, members of corporate
boards are not only allowed, but even required to have regard to
climate related risks, at least to the extent that they represent
financially material risks.
IV. Conclusion and Outlook
In the absence of comprehensive, specific and enforceable obligations for
corporations to reduce or limit their GHG emissions, considerable efforts
are currently being undertaken to develop international climate
change-related guidelines and recommendations for the private sector. These
instruments would typically be considered as soft law being suitable to be
eventually transformed into hard law, a development which has already
begun. While its concept and scope needs further refinement and discussion,
CCR can serve as a basis to frame further discourse on corporate
responsibility in the field of climate change.
The regulatory framework governing the behavior of corporate
decision-makers in the climate change context is constantly developing.
Accordingly, the extension of the relevant duties and obligations is a
consequence of moving societal perceptions.
The COVID-19 pandemic is a reminder that major disruptions to business as
usual can occur at any time. Similar to risks of global pandemics,
scientists have been warning of climate change risks for decades. While it
seems that these warnings are heard by governments and the corporate world
more than in previous years, it still appears questionable whether the
corporate response to climate change risks occurs coherently and swiftly.
In this context, the work of the TCFD and international bodies including
the OECD and the UN in developing widely applicable standards remains
See United Nations Environment Programme (UNEP),
Emissions Gap Report 2020: Executive Summary, 2020 (highlighting that the COVID-19 crisis "offers only a
short-term reduction and will not contribute significantly to
emissions reductions by 2030 unless countries pursue an economic
recovery that incorporates strong decarbonization").
The authors fully acknowledge the multifaceted complexity of the
issue discussed herein. A comprehensive analysis of all relevant
developments and legal aspects goes beyond the scope of this
article. For instance, the authors do not discuss the role of
carbon pricing mechanisms such as emission trading systems. It is
also noted that a comprehensive concept of CCR would likely include
further aspects including, for instance, board composition,
remuneration, target setting, etc. In that sense, this article
undertakes a first "sketch" of CCR.
Rolf H. Weber, Shaping Internet Governance: Regulatory Challenges,
Zurich 2010, p. 2.
Christine Kaufmann, From Profit to People and Planet: Rethinking
the Purpose of the Company, in: Weber/Stoffel/Chenaux/Sethe (eds.),
Aktuelle Herausforderungen des Gesellschafts- und
Finanzmarktrechts, Zurich 2017, p. 6. Regarding the history of CSR
see Krista Nadakavukaren Schefer, Social Power, Social
Responsibility, and Corporations: from CSR to Business and Human
Rights, ZSR 139/2020 II, p. 24.
European Commission, Green Paper: Promoting a European framework
for Corporate Social Responsibility (COM  366 final), p.
See, e.g., Beate Sjåfjell, Why Law Matters: Corporate Social
Irresponsibility and the Futility of Voluntary Climate Change
Mitigation, European Company Law 8/2011, p. 57 s.
European Commission, A renewed strategy 2011-14 for Corporate
Social Responsibility (COM  681), p. 6. The
European Commission currently undertakes to review its corporate
governance approach again (see below, II.2).
See Peter Forstmoser, Corporate Social Responsibility,
eine (neue) Rechtspflicht für Publikumsgesellschaften?, in:
Waldburger/Sester/Peter/Baer (eds.), Law & Economics:
Festschrift für Peter Nobel zum 70. Geburtstag, Bern 2015, p.
Rolf H. Weber, Corporate Social Responsibility as a Gap-Filling
Instrument?, in: Newell (ed.), Corporate Social Responsibility:
Challenges, Benefits and Impact on Business Performance, New York
2014, p. 87.
Élodie Béthoux/Claude Didry/Arnaud Mias, What Codes of Conduct Tell Us: corporate social responsibility
and the nature of the multinational corporation, Corporate
Governance: An International Review 15/2007, p. 77.
World Business Council for Sustainable Development, Corporate
Social Responsibility: Meeting Changing Expectations, 1999.
Milton Friedman, Capitalism and Freedom, Chicago 1962, p. 112. It
must be noted that Friedman did not entirely exclude the
consideration of other interests than making profits in the
interest of the owners of the corporation by stating that a
corporate executive is also responsible to conform to the basic
rules of society, both those embodied in law and ethical custom,
see Kaufmann (fn. 5), p. 5.
See, e.g., William Bradford, Beyond Good and Evil: The
Commensurability of Corporate Profits and Human Rights Notre Dame
Journal of Law, Ethics & Public Policy 2012, p. 148. See also
Eric Posner, Milton Friedman Was Wrong,
The Atlantic, 22 August 2019.
Beate Sjåfjell, Beyond Climate Risk: Integrating
Sustainability into the Duties of the Corporate Bond, Deakin Law
Review 23/2018, p. 53.
Kaufmann (fn. 5), p. 6 s.; Martin Petrin, Reconceptualizing the
Theory of the Firm - From Nature to Function, Penn State Law Review
2013, p. 46; Rashid Bahar, Responsabilité sociétale des
entreprises en droit de la société anonyme: entre devoir
des organes et nouvelle technique de réglementation, ZSR
139/2020 II, p. 281 (referring to the "grandeur et decadence
de la shareholder value"); Mathieu Blanc, Corporate Purpose
and Board of Directors: Means and Ends of Corporate Governance, SZW
2020, p. 228.
See, e.g., David Monsma, Equal Rights, Governance, and the
Environmental Justice Principles in Corporate Social
Responsibility, Ecology Law Quarterly 33/2006, p. 477.
John Elkington, Cannibals with Forks: the Triple Bottom Line of
21st Century Business, Oxford 1997; Weber, Corporate Social
Responsibility (fn. 10), p. 89.
Regierungskommission, Deutscher Corporate Governance Kodex (German
Corporate Governance Code, version of 16 December 2019), Preamble.
Colin Mayer, Reinventing the corporation, Journal of the British
Academy 4/2016, p. 53.
Mayer (fn. 20), p. 65.
Mayer (fn. 20), p. 66.
Mayer (fn. 20), p. 66.
Ali A. Zaidi, Mandates for Action: Corporate Governance Meets
Climate Change, Stanford Law Review Online 72/2020, p. 124.
See Lucian A. Bebchuk / Kobi Kastiel / Roberta Tallarita,
For Whom Corporate Leaders Bargain, 2020 (finding empirical evidence that in private equity
acquisitions, corporate leaders make very little use of their power
to negotiate for stakeholder protections, but instead use their
bargaining power to obtain benefits for shareholders, executives,
See generally Benedict Kingsbury, The International Legal Order,
in: Tushnet/Cane (eds.), The Oxford Handbook of Legal Studies,
Oxford 2003, p. 271 ss.
Weber, Corporate Social Responsibility (fn. 10), p. 90.
In the sense that they are likely to affect financial performance.
See, e.g., Paul Rissman / Diana Kearney, Rise of the Shadow ESG
Regulators: Investment Advisers, Sustainability Accounting, and
Their Effects on Corporate Social Responsibility, Environmental Law
Reporter 49/2019, p. 10160.
See UN PRI, About the PRI.
The six principles represent a "voluntary and
aspirational" set of possible actions for investors.
See Thomas Clarke, The Widening Scope of Directors' Duties: Closing
the Gap Between Legal Obligation and Enforcement Practice, Seattle
University Law Review 39/2016, p. 570.
See, e.g., Rolf H. Weber / Andreas Hösli, Climate Change
Liability: Comparing Risks for Directors in Jurisdictions of the
Common and Civil Law, Climate Law (CLLA) 10/2020, p. 195, with
references; Sarah Barker / Ellie Mulholland,
Directors' Liability and Climate Risk: Comparative Paper:
Australia, Canada, South Africa, and the United Kingdom, 2019, p. 17.
Clarke (fn. 35), p. 545 ss.
See, e.g., Rolf H. Weber, Realizing a New Global Cyberspace
Framework, Normative Foundations and Guiding Principles, Berlin
2014, p. 90 s.; Valentin Jentsch, Corporate Social Responsibility
between Self-Regulation and Government Intervention: Monitoring,
Enforcement and Transparency, European Business Law Review 2020, p.
See generally Howard R. Bowen, Social Responsibilities of the
Businessman, New York 1953.
Weber, Realizing a New Global Cyberspace Framework (fn. 40), p. 91 ss., Jentsch (fn. 40), p. 287 ss.
Andrew T. Guzman / Timothy L. Meyer, International Soft Law, The
Journal of Legal Analysis 2/2010, p. 175.
Weber, Realizing a New Global Cyberspace Framework (fn. 40), p. 27.
Smit et al. (fn. 45), p. 556.
Rolf H. Weber, Overcoming the Hard Law/Soft Law Dichotomy in Times
of (Financial) Crises, Journal of Governance and Regulation 1/2012,
Clarke (fn. 35), p. 571.
Clarke (fn. 35), p. 571; Weber, Corporate Social Responsibility
(fn. 10), p. 90.
Weber, Corporate Social Responsibility (n 10), p. 87.
Christopher Wright / Daniel Nyberg, An Inconvenient Truth: How
Organizations Translate Climate Change into Business as Usual,
Academy of Management Journal 60/2017, p. 1633.
Intergovernmental Panel on Climate Change (IPCC), 2018: Summary for Policymakers,
in: Global Warming of 1.5°C. An IPCC Special Report on the
impacts of global warming of 1.5°C above pre-industrial levels
and related global greenhouse gas emission pathways, in the context
of strengthening the global response to the threat of climate
change, sustainable development, and efforts to eradicate poverty,
C.2, p. 15.
World Economic Forum (WEF),
The Global Risks Report 2021, 2021, p. 3 (the top risk in terms of likelihood being extreme
weather, and the top risk in terms of impact being infectious
diseases, in the face of COVID-19).
This graph has been inspired by Clarke (fn. 35), p. 547 and amended
by the authors to specifically reflect CCR.
Goal 13 (Climate Action) is to take urgent action to combat climate
change and its impacts, whilst acknowledging that the "United
Nations Framework Convention on Climate Change [UNFCCC, United Nations,
Treaty Series, vol. 1771, No. 30822] is the primary international,
intergovernmental forum for negotiating the global response to
climate change" (fn. 56, p. 8).
See Weber/Hösli (fn. 38), p. 192 ss. (discussing in particular
the European Commission's Action Plan: Financing Sustainable Growth
[European Commission, 'Action Plan: Financing Sustainable Growth',
Brussels, 8 March 2018, COM(2018) 97 final]).
See Weber/Hösli (fn. 38), p. 154 s., with further references.
www.ngfs.net. Members of the NGFS, which include the European Central Bank
(ECB), the International Monetary Fund (IMF), and many others,
acknowledge climate change as a source of financial risk (NGFS, First Progress Report,
2018, p. 3).
In relation to the United Kingdom and Australia, see
Weber/Hösli (fn. 38), p. 172 ss.
See generally Ben Caldecott, Introduction to special issue:
Stranded assets and the environment, Journal of Sustainable Finance
and Investment 1/2017, p. 1; Weber/Hösli (fn. 38), p. 155 s.
Javier Solana, Climate Breakdown Litigation in Financial Systems: A
Typology, Transnational Environmental Law 9/2020, p. 103.
See Weber/Hösli (fn. 38), p. 158 ss.
Decision of the Landgericht Essen 2 O 285 of 15
December 2016 (Lliuya v. RWE; printed in NVwZ 2017, p.
234), discussed in Weber/Hösli (fn. 38), p. 191 s.
Weber/Hösli (fn. 38), 194.
Martin Spitzer / Bernhard Burtscher, Liability for Climate Change:
Cases, Challenges and Concepts, Journal of European Tort Law 8/2017, p. 176.
Sullivan et al. (fn. 32), 11.
OECD (fn. 74), p. 46.
See Sullivan et al. (fn. 32), p. 12.
Zaidi (fn. 25), p. 131.
Zaidi (fn. 25), p. 124.
See Clarke (n 35), 541.
Zaidi (fn. 25), p. 126.
See Weber/Hösli (fn. 38), p. 172 ss.
See generally Andreas Hösli / Rolf H. Weber, Climate Change
Reporting and Due Diligence: Frontiers of Corporate Climate
Governance, forthcoming 2021.
See Smit et al. (fn. 45), p. 36.
Smit et al. (fn. 45), p. 43.
Kaufmann (fn. 5), p. 14.
The Netherlands NCP,
4 NGOs versus ING, Final Statement, 19 April 2019. The Final Statement states that "[u]nder the
terms of the OECD Guidelines companies are expected to conduct a
due diligence process in respect of their environmental impact,
including climate impact. This relates not only to their own
negative environmental impact, but also to the impact in their
value chain" (p. 3).
See Smit et al. (fn. 45), p. 37.
Smit et al. (fn. 45), p. 16.
See, e.g., European Commission, Guidelines on reporting
climate-related financial information, C(2019) 4490 final.
Further, the Non-Financial Reporting Directive (Directive [EU] 2014/95/EU
amending Directive [EU] 2013/34 as regards disclosure of
non-financial and diversity information by certain large
undertakings and groups [NFRD]) currently undergoes revision.
Loi de Vigilance
du 27 mars 2017 relative au devoir de vigilance des
sociétés mères et des entreprises donneuses d'ordre
(Loi n° 2017-399),
discussed in Weber/Hösli (fn. 38), p. 186 ss.
Although a majority of the Swiss electorate (50.7%) had voted in
favour of the Responsible Business Initiative, the second,
"federalist" requirement to amend the constitution, a
majority of the states, was not reached. As a result of the
rejection, a counter-proposal introducing certain mandatory
transparency rules will go forward. Generally with respect to human
rights and environmental corporate responsibility in Switzerland,
see Damiano Canapa / Evelyne Schmid / Elena Cima, "Entreprises
responsables": trois malentendus, Jusletter of 23 November
See Weber, Overcoming the Hard Law/Soft Law Dichotomy (fn. 47), p.
E.g., Rolf H. Weber / Rainer Baisch, Liability of Parent Companies
for Human Rights Violations of Subsidiaries, European Business Law
Review 2016, p. 685.
See, e.g., Spitzer/Burtscher (fn. 72).
Zaidi (fn. 25), p. 126.
See, e.g., Noel Hutley / Sebastian Hartford-Davis,
Climate Change and Directors' Duties, 2016, paras 12, 42 ss.; Lisa Benjamin, The Duty of Due
Consideration in the Anthropocene: Climate Risk and English
Directorial Duties, Carbon & Climate Law Review 11/2017, p. 94
ss.; Weber/Hösli (fn. 38), p. 188 s., with further reference.