The elusive purpose of corporate purpose

MacNeil, I. and Esser, I.-M. (2023) The elusive purpose of corporate purpose. In: Routledge Handbook on Private Law and Sustainability. Routledge. (Accepted for Publication)

Abstract

Corporate purpose has emerged in recent years as a key issue in connection with the role of corporate governance in the transition towards sustainability. Ultimately corporate purpose defines who the company is, and why it exists. It focuses on a meaningful contribution to meet environmental and social needs, communicated externally and embedded in corporate culture. We start by reviewing what corporate purpose means in different contexts and how it is framed in academic and policy discourse and then move on to addressing some key questions: whose interests should be encompassed by corporate purpose; who should decide about corporate purpose, the board or the shareholders; and what legal technique should be used to implement corporate purpose? We undertake our analysis primarily by reference to the UK, which provides a suitable case study in the light of its long-standing emphasis on flexibility in company law, its development of soft law governance standards encompassing corporate purpose and its promotion of stewardship by investors. In that sense the UK provides a good test of the capacity of private ordering to set, implement and adjust corporate purpose. We link our analysis to our earlier ‘entity model’ of ESG, which we proposed as a solution to mitigate the limitations of the financialized model of ESG which has become dominant globally.

• Item Type: Book Sections
• Keywords: corporate purpose, ESG, sustainability, directors' duties, s 172.
• Status: Accepted for Publication
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Esser, Professor Irene-Marie and MacNeil, Professor Iain
• Authors: MacNeil, I., and Esser, I.-M.
• College/School: College of Social Sciences > School of Law
• Publisher: Routledge