Abstract

Paper Authors: Steen Thomsen

I discuss the legal implications of corporate purpose and CSR/ESG based on a seminal overview by Binder, Hopt, and Kuntz (2024). Mandatory corporate purpose statements without commitment or enforcement are unlikely to have much of an effect and may be captured by bureaucratic or political interests if they are publicly enforced. Hower corporate purpose can be supported by private enforcement including purposeful ownership, private verification schemes, alternative corporate forms, or lawsuits for breach of purpose, and the law can do a great deal to facilitate or deter such private ordering. Corporate sustainability is well justified in an age of government failure, but reporting and governance requirements have become excessive and are now being scaled back. Law can do a great deal to make it more realistic and impactful by focusing on the essentials using an elevated materiality standard. Corporate purpose can further help to focus corporate practices for social responsibility and environmental sustainability on relevant (material) issues, for example in non-financial reporting, financial risk management, and supply chain due diligence.

Download Paper (Available Soon)