Chapter 25: The EU’s Approach to Environmentally Sustainable Business: Can Disclosure Overcome the Failings of Shareholder Primacy?
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Achieving sustainability requires that business not only complies with environmental law, but also that business goes beyond that which is expressly regulated by environmental law. This chapter examines regulatory approaches that seek to integrate environmental sustainability into the decision-making of business. In canvassing the EU’s main policy and legislative initiatives, we find strong reliance on various forms of disclosure, insufficient to mitigate the destructive social norm of shareholder primacy. This Anglo-American, law-and-economics inspired concept is not rooted in EU law but has spread and gradually colonised the discretionary space that European company law gives corporate decision-makers to decide on how to best run the companies. The result is a prioritisation of short-term maximisation of shareholder returns. A fundamental shift towards coherent and more stringent regulation is needed to mitigate shareholder primacy and realise the potential of European business to contribute to sustainability.

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