Securing the Future of European Business: SMART Reform Proposals
By Beate Sjåfjell, University of Oslo, Jukka Mähönen, University of Oslo, Tonia A. Novitz, University of Bristol, Clair Gammage, University of Bristol and Hanna Ahlström, Swedish Royal Academy of Sciences
7 May 2020, SSRN
Fulfilling the Sustainable Development Goals (SDGs), and more broadly, achieving sustainability, requires reform of EU laws, policies and practice concerning business. The contribution of business is vital to achieving sustainability, and yet we know that business-as-usual currently undermines sustainability goals. To change this, reform is necessary.
The Covid19 pandemic, currently affecting most countries around the world, highlights the interconnectedness, complexity and vulnerabilities of our global society. At the time of writing, the EU and many Member States struggle to find out how to mitigate the worst economic and social impacts of the virus and the measures put into place to limit the spread. In the months and years ahead, more economic rescue packages and incentives will be introduced to reboot the economy after this unplanned and unwanted shutdown. It is imperative that this is done in a way that supports the transition to sustainability.
Our SMART Project proposals aim to contribute to this transition and secure the future of European business. In this report, we introduce a broader understanding of the financial risks of unsustainability, than the current one that tends to focus on (a limited understanding of) climate risk. This show the necessity of fundamental change for business and indicates the possibilities for business.
Our proposals encompass the EU’s role as a global actor in international trade and investment, as well as the EU’s role as European legislator with the power to regulate European business, including their governance of global value chains. We propose that the EU take regulatory action to shape business conduct in trade and investment as in other facets of their operations. We also propose changes to EU company law, to redefine the purpose of business and the duties of the board. This will ensure that the purpose of sustainable value creation is integrated throughout the business, and that business contributes to global society staying with planetary boundaries. This is supported by our proposals for a comprehensive and reliable reporting framework.