"Redefining directors' duties in the EU to promote long-termism and sustainability", 3 Oct 2018

The purpose of this paper is to explore ways to enhance director duties and corporate governance by explicitly incorporating sustainability factors into those duties and focusing directors’ attentions on the long-term. This paper comes as a direct response to the recommendations set out in of the EU High Level Expert Group on Sustainable Finance’s paper ‘Financing a sustainable European economy’ (the HLEG Paper), and the European Commission’s Action Plan: Financing Sustainable Growth (Action Plan)... [T]he paper [...] recommends that the EU and its member states clarify in law and in the accompanying guidance that: 1. The primary beneficiary of directors’ duties is the company... 2. The primary interest of the company is to survive in the long-term... It recommends the introduction of new directors’ duties with respect to two aspects of sustainability: 3. A duty to identify and mitigate long-term economic, social and environmental risks to the company’s interests... 4. A [...] legal requirement for directors to carry out ongoing human rights and environmental due diligence... We also recommend that a duty of the company (rather than the directors) be introduced...