Sustainability and Purpose-Driven Companies: New Legal Trends from a Comparative Law Perspective

Abstract

As sustainability takes centre stage in the political agenda and corporate governance discussions, the law becomes crucial in facilitating the transition from shareholder primacy to responsible capitalism. The law has the potential to influence the behaviour of private companies by establishing rules that ensure businesses profit from creating benefits rather than generating detriments to society, effectively incentivising positive practices while disincentivising harmful ones. Nevertheless, the existence of a grey area for activities that do not materialise in tort, or the violation of other mandatory rules, cannot be denied, and is probably where the reconceptualisation of fiduciary duties and corporate purpose can mediate. New legal trends in these areas are analysed with a special focus on the European context and some comparative law considerations with respect to the UK and the US. An examination of the law in the books and the law in action suggests that the boundaries of directors’ duties are expanding, and the dual-purpose companies’ directors’ management and accountability model appears an appropriate general management paradigm for the new era of responsible capitalism.