SUSTAINABILITY VS. CORPORATE PURPOSE: WILL TRANSFORMING VALUES SHIFT THE PARADIGM?

Abstract

The recently reignited debate on the corporate purpose focuses primarily on the question, whether sustainability-influenced stakeholderism may substitute the domi nating shareholder value doctrine. Its outcomes remain vague. In order to add some extra fuel to the ongoing discussion, this examines an alternative research angle in order to investigate the impact of the sustainability postulate on the notion of the corporate purpose. According to the paper’s core claim, profoundly changing values within society may propel a paradigm shift which would lead to the abandonment to the prevailing shareholder primacy doctrine. The paper establishes a theoretical framework build upon the concept of safety valves embedded in private law systems which open the legal system to judgements on morality (bonos mores) and enable its running “update” according to values cultivated by society at a given time. It also discusses preliminary empirical evidence which indicates that in light of the ongoing value transformation within society, safety valves in private law could enable the sustainability objective to invade the corporation “from the outside” and necessitate the reconceptualization of the corporate purpose. Consequently, even if the shareholder value model’s triumph in the current corporate law debate is assumed, the process of delineating the corporate purpose and implementing it into corporate conduct is fenced-in by safety valves as institutions of general private law. As a result, the paper wishes to provoke the contemplation on whether it is actually up to the corporate law centered debate to decide, how the corporate purpose should be defined. It urges to consider the possibility, which the notion of the corporate purpose as perceived by society at large is already being subject to a profound value transformation towards sustainability and the corporate law debate is not to be considered as a driver of this process. This realization could bring about a denouement of the Gordian knot of the stakeholder v. shareholder primacy dispute and refocus the academic corporate law discussion on issues of legal design which would translate the “externally” reconceptualized corporate purpose into corporate law.