The future of company law and sustainability

In spite of apparently earnest reform efforts on many levels and in many jurisdictions, including, for example, the adoption in April 2014 of new non-financial reporting requirements for the largest companies in the EU, there are few signs that current governance regimes are or will be capable of producing more than just incremental improvements. Incrementalism is not even close to the fundamental shift we need to change from ‘business as usual’ to an environmentally sustainable path. While politicians and business magnates emphasise solutions that are within the realms of what is perceived as politically or financially realistic, the fact that nature has its own realism is not well recognised outside of scientific and academic communities. In fact, some business and political elites conspire to retard progress by strenuously doubting the basic science of climate change. Australia, one of the world’s worst climate polluters, as measured by per capita GHG emissions, provides such grim evidence when in July 2014 the federal government sensationally repealed its national carbon tax. The speed at which we transgress the planetary boundaries 3 is unaffected by the limits of what is possible to win political consensus for, or to what the ‘markets’ at any time are perceived to be willing to accept. The celebration of these politically feasible incremental changes, mere nods towards sustainability, may in themselves hinder real change. Incremental improvements may lull us into a dangerous complacency. Recent scientific research in 2014 suggests humankind is perched on the precipice of a crisis in the biosphere, with climate change the gravest threat. Current GHG emissions from industrialisation and deforestation are likely to result in breaching the safe warming threshold of two degrees Celsius, and thus the danger of runaway climate change is looming. The fifth Assessment Report on climate change by the Intergovernmental Panel on Climate Change (IPCC), published in April 2014, reiterates its message from its 2007 assessment, namely, that we must urgently begin massively reducing emissions if humankind is to avoid dangerous anthropogenic global warming.