nach oben

Erschienen in:

2021 | OriginalPaper | Buchkapitel

5. Sustainable Corporate Governance: The Role of the Law

verfasst von : Alessio M. Pacces

Erschienen in: Sustainable Finance in Europe

Verlag: Springer International Publishing

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

The debate on sustainable finance seldom includes the perspective of shareholders. However, shareholders are important for the governance of publicly held corporations today, because their holdings are concentrated in the hands of few institutional investors. Institutional investors can therefore have an impact on the sustainability of the largest companies in the world, as they often claim they do—particularly in communications with their beneficiaries. Whether institutional investors actually have such an impact is an open question. Recent changes in EU financial regulation aim to bring more clarity on this matter. For instance, the revised Shareholder Rights Directive requires companies, on a comply-or-explain basis, to disclose voting policies and behaviours concerning sustainability. More in general, EU law is increasing the supply of standard measures of sustainable investment, to be used in institutional investors’ communications with their beneficiaries. This chapter discusses whether this legislation can align the incentives of institutional investors to pursue sustainable corporate governance with the prosocial preferences of their beneficiaries.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 390 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Maschinenbau + Werkstoffe

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Vorheriges Kapitel Redefining Corporate Purpose: Sustainability as a Game Changer

Nächstes Kapitel Integrating Sustainability in EU Corporate Governance Codes

European Commission (2018). Action Plan: Financing Sustainable Growth. COM(2018) 97 final.

At the end of 2017, there were approximately 41.000 listed companies in the world, worth some $84 trillion in market value, roughly equivalent to the world’s GDP. De La Cruz, A., Medina, A., & Tang, Y. (2019). Owners of the World’s Listed Companies. Paris: OECD Capital Market Series.

Gilson, R.J., & Gordon, J.N. (2013). “The Agency Costs of Agency Capitalism: Activist Investors and The Revaluation of Governance Rights”. Columbia Law Review, 113(4), 863–927.

Fink, L. (2020). “Letter to CEOs”, Blackrock: https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter.

See European Commission (2018). Action Plan: Financing Sustainable Growth. COM(2018) 97 final; and European Commission (2019). The European Green Deal. COM(2019) 640 final.

Pigou, A. (1920). The Economics of Welfare. London: Macmillan.

Ogus, A.I. (1994). Regulation: Legal Form and Economic Theory. Oxford University Press.

Faure, M.G. (2012), “Environmental Regulation”. In R.J. Van den Bergh & A.M. Pacces (eds.), Regulation and Economics, Encyclopedia of Law and Economics, 2nd edition, Cheltenham: Edward Elgar, 229–301.

In this essay, I take this policy goal as a given assuming it reflects the effort to maximize global social welfare. Andersson, M., Bolton, P., & Samama, F. (2016). “Governance and Climate Change: A Success Story in Mobilizing Investor Support for Corporate Responses to Climate Change”. Journal of Applied Corporate Finance, 28(2), 29–33.

Tirole, J. (2017). Economics for the Common Good. Princeton University Press.

Gunningham, N., Grabosky, P., & Sinclair, D. (1998). Smart Regulation: Designing Environmental Policy. Oxford University Press.

Kraakman, R., Armour, J., Davies, P., Enriques, L., Hansmann, H., Hertig, G., Hopt, K., Kanda, H., Pargendler, M., Ringe, W.G. and Rock, E. (2017). The Anatomy of Corporate Law: A Comparative and Functional Approach. Oxford University Press.

Bénabou, R., & Tirole, J. (2010). “Individual and Corporate Social Responsibility”. Economica, 77(305), 1–19.

Coase, R.H. (1960). “The Problem of Social Cost”. Journal of Law and Economics, 3, 1–44.

Gantchev, N., Giannetti, M., & Li, R. (2019). “Does Money Talk? Market Discipline Through Selloffs and Boycotts”. European Corporate governance Institute (ECGI)—Finance Working Paper No. 634/2019, http://dx.doi.org/10.2139/ssrn.3409455.

European Commission (2018). Action Plan: Financing Sustainable Growth. COM(2018) 97 final.

Hart, O., & Zingales, L. (2017). “Companies Should Maximize Shareholder Welfare Not Market Value”. Journal of Law, Finance, and Accounting, 2(2), 247–275.

Bénabou, R., & Tirole, J. (2010). “Individual and Corporate Social Responsibility”. Economica, 77(305), 1–19.

Bénabou, R., & Tirole, J. (2010). “Individual and Corporate Social Responsibility”. Economica, 77(305), 9.

Ilhan, E. Krueger, P., Sautner, Z. & Starks, L.T. (2020). “Climate Risk Disclosure and Institutional Investors”. European Corporate governance Institute (ECGI)—Finance Working Paper No. 661/2020, http://dx.doi.org/10.2139/ssrn.3353239.

Verheyden, T., Eccles, R.G., & Feiner, A. (2016). “ESG for All? The Impact of ESG Screening on Return, Risk, and Diversification”. Journal of Applied Corporate Finance, 28(2), 47–55.

Ferrell, A., Liang, H., & Renneboog, L. (2016). “Socially Responsible Firms.” Journal of Financial Economics, 122(3), 585–606.

Weisbach, D., & Sunstein, C.R. (2009). “Climate Change and Discounting the Future: Guide for the Perplexed”. Yale Law & Policy Review, 27(2), 433–458.

Hart, O., & Zingales, L. (2017). “Companies Should Maximize Shareholder Welfare Not Market Value”. Journal of Law, Finance, and Accounting, 2(2), 247–275.

Bénabou, R., & Tirole, J. (2010). “Individual and Corporate Social Responsibility”. Economica, 77(305), 10

Blair, M., & Stout, L. (1999). “A Team Production Theory of Corporate Law”. Virginia Law Review, 85(2), 247–328.

E.g. Sjåfjell, B. (2017). “Achieving Corporate Sustainability: What Is the Role of the Shareholder?”. In H. Birkmose (ed.), Shareholders’ Duties in Europe. Alphen aan den Rijn: Kluwer Law International; Winter, J. (2018). “A Behavioral Perspective on Corporate Law and Corporate governance”. In J.N. Gordon and W.-G. Ringe (eds.), The Oxford Handbook of Corporate Law and Governance, Oxford University Press, 159–183.

Mayer, C. (2018). Prosperity: Better Business Makes the Greater Good. Oxford University Press.

Friedman, M. (1970). “The Social Responsibility of Business Is to Increase Its Profits”. New York Times Magazine, September 13.

Jensen, M.C. (2002). “Value Maximization, Stakeholder Theory, and The Corporate Objective Function”. Business Ethics Quarterly, 235–256.

Fisch, J.E. (2020). “The Uncertain Stewardship Potential of Index Funds”. European Corporate governance Institute (ECGI)—Law Working Paper No. 490/2020, http://dx.doi.org/10.2139/ssrn.3525355; Gilson, R. (2019). “Legal and Political Challenges to Corporate Purpose”. Journal of Applied Corporate Finance, 31(3), 18–21.

Rock, E.B. (2020). “For Whom Is the Corporation Managed in 2020?: The Debate over Corporate Purpose”. European Corporate Governance Institute—Law Working Paper No. 515/2020, http://dx.doi.org/10.2139/ssrn.3589951.

See the Greenhouse gas Protocol, https://ghgprotocol.org/guidance.

Hirschman, A.O. (1970). Exit, Voice and Loyalty. Cambridge, MA: Harvard University Press.

Recent research suggests that this moment may have already arrived. See Ceccarelli, M., Ramelli, S., & Wagner, A.F. (2020). “Low-Carbon Mutual Funds”. European Corporate governance Institute (ECGI)—Finance Working Paper No. 659/2020, http://dx.doi.org/10.2139/ssrn.3353239 (finding that climate-responsible funds experience higher idiosyncratic risk) and Hoepner, A.G., Oikonomou, I., Sautner, Z., Starks, L.T., & Zhou, X. (2020). “ESG Shareholder Engagement and Downside Risk”. European Corporate governance Institute (ECGI)—Finance Working Paper No. 671/2020, http://dx.doi.org/10.2139/ssrn.2874252 (finding that shareholder engagement with portfolio companies reduces downside risk).

See, respectively, Hartzmark, S.M., & Sussman, A.B. (2019). “Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows”. Journal of Finance, 74(6), 2789–2837; and Ceccarelli, M., Ramelli, S., & Wagner, A.F. (2020). “Low-Carbon Mutual Funds”. European Corporate Governance Institute (ECGI)—Finance Working Paper No. 659/2020, http://dx.doi.org/10.2139/ssrn.3353239.

De La Cruz, A., Medina, A., & Tang, Y. (2019). Owners of the World’s Listed Companies. Paris: OECD Capital Market Series. Notable exceptions include controlling shareholders and state ownership, both of which are prominent worldwide. These are large investors who are sufficiently powerful to foster prosocial goals, if they so wish.

https://www.cdp.net/en/articles/media/new-report-shows-just-100-companies-are-source-of-over-70-of-emissions. 59% of the top-100 GHGs producers are state-owned companies and 9% are private companies.

De La Cruz, A., Medina, A., & Tang, Y. (2019). Owners of the World’s Listed Companies. Paris: OECD Capital Market Series.

Berle, A. & Means, G. (1932). The Modern Corporation and Private Property. New York: Macmillan.

Gilson, R.J., & Gordon, J.N. (2013). “The Agency Costs of Agency Capitalism: Activist Investors and The Revaluation of Governance Rights”. Columbia Law Review, 113(4), 863–927.

The 20 largest institutional investors own 25% or more, on average, in Canada, the Netherlands, Poland, South Africa, Finland, Japan, Sweden and Norway. De La Cruz, A., Medina, A., & Tang, Y. (2019). Owners of the World’s Listed Companies. Paris: OECD Capital Market Series.

Aguilera, R.V., Bermejo, V.J., Capapé, A.J., & Cuñat, V. (2019). “Firms’ Reaction to Changes in the Governance Preferences of Active Institutional Owners”. European Corporate Governance Institute—Finance Working Paper No. 625/2019, http://dx.doi.org/10.2139/ssrn.3411566; Brav, A., Jiang, W., Li, T., & Pinnington, J. (2019). “Picking Friends Before Picking (Proxy) Fights: How Mutual Fund Voting Shapes Proxy Contests”. European Corporate Governance Institute (ECGI)—Finance Working Paper No. 601/2019, http://dx.doi.org/10.2139/ssrn.3101473.

Jensen, M.C., & Meckling, W.M. (1976). “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure”. Journal of Financial Economics, 3(4), 305–360.

Armour, J., Awrey, D., Davies, P.L., Enriques, L., Gordon, J.N., Mayer, C.P., & Payne, J. (2016). Principles of Financial Regulation. Oxford University Press.

Kraakman, R.H. (1986). “Gatekeepers: The Anatomy of a Third-Party Enforcement Strategy”. Journal of Law, Economics, & Organization, 2(1), 53–104.

Armour, J., Awrey, D., Davies, P.L., Enriques, L., Gordon, J.N., Mayer, C.P., & Payne, J. (2016). Principles of Financial Regulation. Oxford University Press.

Hartzmark, S.M., & Sussman, A.B. (2019). “Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows”. Journal of Finance, 74(6), 2789–2837.

Daines, R.M., Gow, I.D., & Larcker, D.F. (2010). “Rating the Ratings: How Good Are Commercial Governance Ratings?”. Journal of Financial Economics, 98(3), 439–461; Shackleton et al. 2019, mimeo (on file with author).

Partnoy, F. (2001). “Barbarians at the Gatekeepers? A Proposal for A Modified Strict Liability Regime”. Washington University Law Quarterly, 79(2), 491–548; Coffee, J.C. (2004). “Partnoy’s Complaint: A Response”. Boston University Law Review, 84(2), 377–382.

Siri, M., & Zhu, S. (2019). “Will the EU Commission Successfully Integrate Sustainability Risks and Factors in the Investor Protection Regime? A Research Agenda”. Sustainability, 11(22), 6292.

Hirschman, A.O. (1970). Exit, Voice and Loyalty. Cambridge, MA: Harvard University Press.

Pacces, A.M. (2016). “Exit, Voice and Loyalty from the Perspective of Hedge Funds Activism in Corporate Governance.” Erasmus Law Review, 9(4), 199–216.

Bushee, B.J. (1998). “The Influence of Institutional Investors on Myopic R&D Investment Behavior”. Accounting Review, 73(3), 305–333.

Edmans, A., & Manso, G. (2011). “Governance Through Trading and Intervention: A Theory of Multiple Blockholders”. Review of Financial Studies, 24(7), 2395–2428.

Gantchev, N., Giannetti, M., & Li, R. (2019). “Does Money Talk? Market Discipline Through Selloffs and Boycotts”. European Corporate Governance Institute (ECGI)—Finance Working Paper No. 634/2019. http://dx.doi.org/10.2139/ssrn.3409455.

Dyck, A., Lins, K.V., Roth, L., & Wagner, H.F. (2019). “Do Institutional Investors Drive Corporate Social Responsibility? International Evidence”. Journal of Financial Economics, 131(3), 693–714.

McCahery, J.A., Sautner, Z., & Starks, L.T. (2016). “Behind the Scenes: The Corporate governance Preferences of Institutional Investors”. Journal of Finance, 71(6), 2905–2932.

Krueger, P., Sautner, Z., Starks, L.T. (2019). “The Importance of Climate Risks for Institutional Investors”. European Corporate Governance Institute (ECGI)—Finance Working Paper No. 610/2019, http://dx.doi.org/10.2139/ssrn.3235190.

Dimson, E., Karakaş, O., & Li, X. (2019). “Coordinated Engagements”. Mimeo, http://dx.doi.org/10.2139/ssrn.3209072; Becht, M., Franks, J.R., & Wagner, H.F. (2019). “Corporate Governance Through Exit and Voice”. European Corporate Governance Institute (ECGI)—Finance Working Paper No. 633/2019, http://dx.doi.org/10.2139/ssrn.3456626.

Isaksson, M., & Çelik, S. (2013). “Who Cares? Corporate Governance in Today’s Equity Markets”. OECD Corporate Governance Working Papers, No. 8, OECD Publishing, http://dx.doi.org/10.1787/5k47zw5kdnmp-en.

Bebchuk, L.A., & Hirst, S. (2019). “Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy”. Columbia Law Review, 119(8), 2029–2146.

Rock, E.B., & Kahan, M. (2019). “Index Funds and Corporate Governance: Let Shareholders Be Shareholders”. European Corporate governance Institute (ECGI)—Law Working Paper No. 467/2019, http://dx.doi.org/10.2139/ssrn.3295098.

Rock, E.B. (2020). “For Whom Is the Corporation Managed in 2020?: The Debate over Corporate Purpose”. European Corporate governance Institute—Law Working Paper No. 515/2020, http://dx.doi.org/10.2139/ssrn.3589951.

Fisch, J.E., & Davidoff Solomon, S. (2020). “Should Corporations Have a Purpose?”. European Corporate Governance Institute—Law Working Paper No. 510/2020, https://ssrn.com/abstract=3561164.

See Griffith, S.J. (2020). “Opt-In Stewardship: Toward an Optimal Delegation of Mutual Fund Voting Authority”. Texas Law Review, 98(6), 983–1047, wondering why private ordering has not yet offered this solution. Hart, O., & Zingales, L. (2017). “Companies Should Maximize Shareholder Welfare Not Market Value”. Journal of Law, Finance, and Accounting, 2(2), 247–275, discuss the same question, assuming incorrectly that fiduciary duties in the U.S. would prevent such arrangement. On why this is not the case, see e.g. Williams, C.A. (2018). “Corporate Social Responsibility and Corporate governance”. In J.N. Gordon and W.-G. Ringe (eds.), The Oxford Handbook of Corporate Law and Governance, Oxford University Press, 634–678.

Fisch, J.E. (2020). “The Uncertain Stewardship Potential of Index Funds”. European Corporate Governance Institute (ECGI)—Law Working Paper No. 490/2020, http://dx.doi.org/10.2139/ssrn.3525355.

Bolton, P., Li, T., Ravina, E., & Rosenthal, H.L. (2019). “Investor Ideology”. European Corporate Governance Institute (ECGI)—Finance Working Paper No. 557/2018, http://dx.doi.org/10.2139/ssrn.3119935.

Bubb, R., & Catan, E. (2019). “The Party Structure of Mutual Funds”, Mimeo, http://dx.doi.org/10.2139/ssrn.3124039.

European Commission (2018). Action Plan: Financing Sustainable Growth. COM(2018) 97 final.

See Siri, M., & Zhu, S. (2019). “Will the EU Commission Successfully Integrate Sustainability Risks and Factors in the Investor Protection Regime? A Research Agenda”. Sustainability, 11(22), 6292 for an excellent overview.

Griffith, S.J. (2020). “Opt-In Stewardship: Toward an Optimal Delegation of Mutual Fund Voting Authority”. Texas Law Review, 98(6), 998–1000.

Iliev, P., & Lowry, M. (2015). “Are Mutual Funds Active Voters?”. Review of Financial Studies, 28(2), 446–485.

Pacces, A.M. (2018). “Shareholder Activism in the Capital Markets Union,” in E. Avgouleas, D. Busch, & G. Ferrarini (eds.), Capital Markets Union in Europe, Oxford University Press, 507–525.

On these problems and the economic rationale of mandatory disclosure, see Armour, J., Awrey, D., Davies, P.L., Enriques, L., Gordon, J.N., Mayer, C.P., & Payne, J. (2016). Principles of Financial Regulation. Oxford University Press.

Art. 19(3) Taxonomy Regulation.

The Taxonomy Regulation prioritizes climate change mitigation and adaptation. The relevant technical standards will apply from 1 January 2022. The technical standards relating to the other goals will apply from 1 January 2023.

See Pacces, A.M. (2000). “Financial Intermediation in the Securities Markets: Law and Economics of Conduct of Business Regulation.” International Review of Law and Economics, 20(4), 479–510, recommending this approach to flag the lack of suitability of financial investment.

Titel: Sustainable Corporate Governance: The Role of the Law
verfasst von: Alessio M. Pacces
Verlag: Springer International Publishing
Buch: Sustainable Finance in Europe
Print ISBN: 978-3-030-71833-6

Electronic ISBN: 978-3-030-71834-3

Copyright-Jahr: 2021
DOI: https://doi.org/10.1007/978-3-030-71834-3_5

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Technik"

Springer Professional "Wirtschaft"