A key component of agency cost theory is that, if left to their own devices, managers will behave in self-interested ways. Natural experiments created by the adoption of constituency statutes, corporate opportunity waivers, tax windfalls, and legal changes to the corporate fiduciary duty show that even when given the freedom to engage in self-interested behavior, managers remain faithful stewards of the firm and remain focused on maximizing profits. Despite agency cost theory’s assumption that managers are self-interested, managers appear to be generally trustworthy. Even if some managers are inclined to behave in strongly self-interested ways, most of them are constrained by competitive markets, which provide little room for slack and diversion. Charlie Brown kicking a football makes an improbable appearance.

Chapter 2 recovers a distinct interpretation of ‘modern socialism’ that focused on diffusing power to producers, consumers, and communities. Over the 1970s and 1980s, several left-wing thinkers and politicians championed redistributing economic and social power through industrial democracy or consumer and community empowerment. These explorations were fuelled by critiques of the post-war state, trade union assertiveness, corporatist experiments, municipal socialism, and market socialism. In the 1980s, they were championed as ‘modern socialism’, mainly as a response to Margaret Thatcher’s flagship policies like popular share ownership and the ‘right to buy’ a council house. Drawing on maverick academics and Eurocommunist journalists, ambitious Labour MPs argued that a ‘modern socialism’ needed to diffuse power through schemes like employee share ownerships. They embraced socioeconomic democracy as ‘modernisation’. However, while some decentralist ideas remained influential, the popularity of diffusing economic power peaked in the late 1980s. This helped scotch subsequent attempts to make the ‘stakeholding economy’ a foundation of New Labour’s ‘modernisation’.

This chapter discusses the relationship between corporate governance and corporate sustainability. We start by looking into the different components of the general corporate governance system. This allows us to revisit a central tension: shareholder- versus stakeholder-oriented governance. We then discuss how well-designed corporate governance can support firms’ sustainability efforts. We label this debate ‘corporate governance for sustainability’, and we discuss how sustainability topics can be integrated into the discussions of boards of directors. Next, we show that some aspects of corporate governance can themselves pose challenges that need to be discussed under the ESG umbrella. We label this debate ‘corporate governance as sustainability’, and we focus on topics that reflect the ‘G’ in ESG (e.g., executive compensation). Finally, we discuss elements of a possible reformed corporate governance system which would allow to better address sustainability-related debates.

Chapter 2 provides a toolbox for managers for developing principles to address moral issues in business. The introductory case describes a student worker observing potentially illegal practices at work. It then examines how classic and contemporary ethical theory can undergird our intuitions and promote reasoned arguments. We start with utilitarianism, or looking to the maximum good for the maximum number, and identify challenges involved in making those calculations. Next, we look at duty-based theories that encourage good for its own sake, with the implication that a firm should benefit all stakeholders, and virtue theory which promotes notions of character and purpose. The chapter also asks whether corporate culture makes a firm sufficiently like a person to be regarded as a moral agent. The ethics of care, often championed by feminist philosophers, is presented as a contrast to classical theory and recent work in standpoint ethics is also discussed. The concluding case deals with EpiPens, potentially life-saving devices which, after a huge increase in price, led to windfall profits to the manufacturer, and invites analysis based on the theories presented.

We are using communication and engagement with stakeholders to attempt to foster positive view of eagles. We are exploring the opportunities for nature-based tourism to highlight the benefits of eagles. We are taking a partnership approach with equal input from land management sectors and conservationists.

Japan adopted its stewardship code in 2014, and revised it in 2017 and 2020. As it paid much attention each time to the UK Code, one might initially think that Japan was following in the UKʼs footsteps. However, although the Japanese Stewardship Code and the UK Stewardship Code bear superficial resemblance, their fundamental policy objectives are almost diametrically opposed. The UK Code aims to restrain excessive risk-taking and short-termism by making institutional investors more responsible to the public. Conversely, the Japanese Code intends to champion shareholders’ interests by making domestic institutional investors more active shareholders who exert pressure on entrenched management. This divergence can also be seen in the two countriesʼ stance on ESG factors in their respective latest revisions. While the 2020 UK Code revision emphasizes the importance of environmental and social issues, the 2020 Japanese Code revision requires that consideration of ESG factors must be consistent with institutional investors’ investment strategy. Such difference in the goals of these Codes shows that caution is needed when comparing the stewardship codes of different jurisdictions.

Law by its very nature tends towards the constraint of the decision-making of individuals, and so has an inherent – but not inevitable – mythological disposition, especially when in combination with both the sovereign and regulatory power of the State. Thereby it reflects shifting forms of – most recently neoliberal – power and truth. A non-mythological law will need to be framed constitutionally but will also require a rethinking of the rule of law, which is currently mostly comprised of anatomical lists of preferred characteristics. There are alternative approaches in the form of teleological accounts – preferred here – and prominent amongst which is that of Krygier. However, he does not go far enough, settling for a critical exploration of social traditions and seeing the arbitrary use of force as the dominant target. This tends to ignore the spread of sovereign power into regulatory forms, which are as intrusive as arbitrary power, albeit in a different manner. An existential rule of law would be founded on purpose-based, fiduciary principles which committed agencies to promote the non-mythological interests of self-responsible individuals. Trust would play a valuable but secondary role in such arrangements.

This chapter coins the term “stakeholder fiduciary” to describe fiduciaries who are formal beneficiaries of their own exercise of fiduciary power. The fiduciary duty of loyalty applies differently to stakeholder fiduciaries, requiring not complete self-abnegation, but rather solidarity with other beneficiaries. Accordingly, a stakeholder fiduciary may retain an equitable share of the profits she generates through her position—even when such profits are the product of conflicted transactions or misappropriated opportunities. More striking still, when a stakeholder fiduciary participates in collective governance, she is entitled to vote exclusively in her own interests as long as she does not abuse her voting power to dominate other beneficiaries or undermine the purposes of the fiduciary relationship.

The chapter argues further that American courts give extra deference to the decisions of stakeholder fiduciaries. As long as a stakeholder fiduciary’s interests are plausibly consistent with the interests of other beneficiaries, courts will allow her to decide for herself how much time and energy she should devote to a particular decision. The best explanation for this deferential standard is that courts trust stakeholder fiduciaries to exercise due care without intrusive judicial oversight precisely because these fiduciaries have a direct stake in their own successful performance.

The chapter draws insights from the institutional theoretic model to investigate the role of courts and other formal adjudicative institutions in promoting sustainable development. Its tripartite institutions framework emphasises the knowledge and communicative elements of sustainable development flowing from key social actors such as adjudicative institutions to other segments of society. Using environmental protection as a case study and making references to national laws and judicial decisions, the chapter demonstrates that adjudicative institutions can manifest a commitment to sustainable development, affirm applicable global standards influence other actors in, and segments of, society. It is argued that the regulatory role of adjudicative institutions includes constitutionalisation of sustainable development, empowerment of individuals and stakeholder groups and addressing vulnerability of victims while the normative role ensures the internalisation and transmission of sustainable development values. The cognitive role includes reshaping local practices by promoting effective glocalisation and appropriate corporate governance and social responsibility for sustainable development. While it shows adjudicative institutions as a key champion for sustainable development in the public and private spheres, the chapter proposes solutions to overcoming impediments to such as lack of explicit provisions, narrowly focusing on compensatory remedies, locus standi, forum non conveniens and choice of law.

The chapter draws on the legal, institutional and stakeholder perspectives to develop a septet framework that provides clarity to the concept of sustainable consumption and production and aligns consumer protection to sustainable development in developing countries. This contextualises the roles of consumers and corporations as institutional actors and consumption as an institution. The chapter uniquely unbundles the concept as consisting of six foundational components: sustainable consumption by proximate consumers for future generations; sustainable production for future generations; sustainable consumption by/for proximate consumers; sustainable production for proximate consumers; participation by proximate consumers; and CSR. The septet framework challenges conventional approaches to consumer vulnerability, disclosure regulation, contract law, consumer responsibilisation, stakeholder, corporate governance, institutional voids and international cooperation. The chapter’s interventionist consumer protection law approach includes public interest-oriented disclosure regulation, distributive justice-oriented contract law, resolution of business-to-consumer information asymmetry, credible corporate social reporting and certification standards, distributed/shared consumer responsibilisation, stakeholder enforcement rights, obligations and protection, independent stakeholder determination of standards, resolution of related agency problems through a stakeholder approach to corporate governance and international cooperation in regulatory standards and enforcement. It is also argued that a consumer protection approach to sustainable development can promote stakeholder engagement and meaningful corporate social responsibility.