A Duty to Minimize the Corporation's Environmental Impacts: Corporate Governance and Sustainable Development

The scale and scope of today's economic activity will impact the natural environment several generations into the future. Much of this economic activity is undertaken by corporations. The interests of future generations in the natural environment, which are not protected adequately by traditional forms of environmental regulations, require moving away from the shareholder primacy norm that currently dominates both academic writing and directors' understanding of corporate governance in North America. The nascent "responsible investing" movement may result in some changes to corporate behaviour, but it also is insufficient to protect the interests of future generations. For these reasons, a new legal duty imposed on corporate directors is proposed here. This duty should be enacted through the corporations statute in order to make clear the change in the duties of directors away from simply maximizing shareholder wealth. The duty would require the board of directors to minimize the corporation's environmental impacts. "Minimize" is defined as up to the point of causing "undue hardship" to the corporation's ability to generate a profit. The duty therefore requires directors to balance profitability and environmental sustainability. This balancing is inherent in the concept of sustainable development, and therefore asking directors to take on this task is necessary to achieve sustainable development. Although this proposal raises concerns regarding compliance, enforcement and accountability, these concerns are answerable.S.J.D.2016-11-30 00:00:0