The current model of corporate governance needs reform. There is mounting evidence that the practices of shareholder primacy drive company directors and executives to adopt the same short time horizon as financial markets. Pressure to meet the demands of the financial markets drives stock buybacks, excessive dividends and a failure to invest in productive capabilities. The result is a ‘tragedy of the horizon’, with corporations and their shareholders failing to consider environmental, social or even their own, long-term, economic sustainability.
With less than a decade left to address the threat of climate change, and with consensus emerging that businesses need to be held accountable for their contribution, it is time to act and reform corporate governance in the EU.
The statement puts forward specific recommendations to clarify the obligations of company boards and directors and make corporate governance practice significantly more sustainable and focused on the long term.
Andrew Johnston, Jeroen Veldman, Robert G. Eccles, Simon Deakin, Jerry Davis, Marie-Laure Djelic, Katharina Pistor, Blanche Segrestin, William M. Gentry, Cynthia A. Williams, David Millon, Paddy Ireland, Beate Sjåfjell, Christopher M. Bruner, Lorraine E. Talbot, Hugh C. Willmott, Charlotte Villiers, Carol Liao, Bertrand Valiorgue, Jason Glynos, Todd L. Sayre, Bronwen Morgan, Rick Wartzman, Prem Sikka, Filip Gregor, David C. Jacobs, Roger Gill, Roger Brown, Vincenzo Bavoso, Neil Lancastle, Julie Matthaei, Scott Taylor, Ulf Larsson-Olaison, Jay Cullen, Alan J. Dignam, Thomas W. Joo, Ciarán O'Kelly, Con Keating, Roman Tomasic, Simon Lilley, Kevin Tennent, Keith Robson, Willy Maley, Iris H. Chiu, Ewan McGaughey, Chris Rees, Nina Boeger, Adam Leaver, Marc T. Moore, Leen Paape, Alan D. Meyer, Marcello Palazzi, Nitasha Kaul, Juan F. Espinosa-Cristia, Timothy Kuhn, David J. Cooper, Susanne Soederberg, Andreas Jansson, Susan Watson, Ofer Sitbon, Joan Loughrey, David Collison, Maureen McCulloch, Navajyoti Samanta, Daniel J. Greenwood, Grahame F. Thompson, Andrew R. Keay, Alessia Contu, Andreas Rühmkorf, Richard Hull, Irene-Marie Esser & Nihel Chabrak,
Corporate Governance for Sustainability,
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/2607