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Thomas Clarke

Corporate governance essentially has three elements defining corporate purpose, balancing interests and measuring performance. Historically these elements have been broadly interpreted with corporate purpose related to the wide interests of stakeholders and the community amounting to a licence to operate. The governance mechanisms have been understood as providing a sense of accountability, responsibility and fairness regarding the interests of the different participants in the company. Finally, performance measurement has been widely conceived as contributing value in financial, social and environmental terms. This careful historical calibration of interests was deliberately overturned by the doctrine of shareholder value and imposition of the idea of shareholder primacy. We are now entering an era in which the irresponsibility of such narrow estimations of corporate purpose, governance and performance is becoming manifest. It is becoming realized that climate change represents as great a threat to business continuity and survival, as it does to the survival of the environment. This reconceptualization of corporate social and environmental responsibility demands the exercise of a new zeitgeist of integrated governance where climate risks are fully recognized, and the necessary strategies and risk management are introduced, guided by appropriate measures and targets.