Section 1: The significance of companies and company law

The authors argue that the company is essential in contributing to the transformation towards sustainability. Thus, regulation or governance of business decision-making should be included in the toolbox for sustainability. The authors describe that the historically contingent coupling of the legal entity and limited liability, which has become the hallmark of the capitalist economy, has not integrated sustainability into corporate decision-making.

Section 2: Shareholder primacy and the social norm of shareholder primacy

The authors define the shareholders’ perspective and state that the philosophical and historical roots of societal welfare are interesting to understand for their analysis of shareholder primacy. However, they argue that shareholder primacy dominates corporate decision-making far too much. Institutional shareholders often encourage short-termism and fail to take a long-term perspective. The social norm of shareholder primacy prevails, creating a fundamental barrier to promoting sustainability.

Section 3: The negative effect of shareholder primacy on environmental sustainability

The authors present various cases, including examples from the UK, Lithuania, Finland, and South Africa, to support their argument that shareholder primacy has negative effects on environmental sustainability. Company law regimes worldwide, as they currently exist, fail to promote environmentally sustainable companies actively.

Section 4: Shareholder primacy and company law

The authors explain that although company law contains possibilities for shareholder-driven pluralism, those powers still enhance the social norm of shareholder primacy in practice. Nevertheless, the authors tentatively identify a way forward to a more sustainable direction for business. They recommend regulatory clarity regarding companies’ purpose in allowing them to operate and propose revising the competence and duties of the board.

Section 5: The unexplored potential and way forward

The authors conclude by stating that there is much unfulfilled potential within company law regimes worldwide, as they currently exist, for companies to change from their generally short-term and environmentally exploitative business models. They recommend codifying the concept of the interests of the company in a modern and inclusive manner, reflecting the redefined purpose of the company clearly.

Overall, the authors provide a comparative analysis of core company law, evaluate barriers, and provide possible ways forward for integrating sustainability into corporate decision-making. They argue that the social norm of shareholder primacy remains the fundamental barrier for sustainability, with shareholder primacy dominating corporate decision-making far too much. The authors provide evidence to support their argument and recommend possible ways forward, such as revising the competence and duties of the board to reflect the redefined purpose of the company and setting key issues straight in a principles-based manner.