08.01 The Sustainable Corporation: Efficiency, Ecology and Equity

The Sustainable Corporation: Efficiency, Ecology and Equity

Interdisciplinary PhD project: Philosophy & Economics

Aim of the Project

Corporations are vital to contemporary economies and bring welfare to a significant part of the world population. However, they do not always operate in an equitable manner. And many of them pose a serious threat to the environment. The aim of this project is to develop a theory of the sustainable corporation. Such a corporation is efficient, equitable and environmentally friendly. This is due not only to the way it is organized but also due to the financial network and legal context in which it is embedded.

Theoretical Background

Corporations form the engine of modern economies. But they also pose social and ecological threats. Some discriminate, exploit and disrupt, at least some of the time. Similarly, too many pollute and contribute to environmental degradation. However, even though they are part of the problem, they also have to be part of the solution. Currently, many corporations prioritize prosperity over the other two pillars of sustainability: people and the planet. This project sets out to develop a theory of the sustainable corporation. It conceives of the corporation, or business more generally, as a very important locus of sustainability. And it sets out to determine how a balance can be achieved between people, planet and prosperity.

               To this end, the project conceives of the corporation as a socially embedded locus of cooperation. Insofar as internal cooperation is concerned, it offers a new perspective on the corporation and the roles that norms, values and ideals play in them. And it proposes a theory that integrates insights from social ontology with findings from the economics of organization (see subproject 1 below). The project also considers the institutional environment in which corporations are embedded. The thesis to be investigated is that robustly achieving societal ideals requires a supportive institutional environment. In this respect, the project focuses on a responsible financial network and legal context (see subprojects 2 and 3).

Research Questions

On a traditional understanding, a system is sustainable if it maintains a certain state or growth rate without depleting resources. However, this descriptive conception is slowly but surely being replaced with a normative or value-laden one (Shi et al. 2021). The 2030 agenda of the United Nations includes not only environmental and climate concerns, but also values such as equity, community, health and gender. Against this background, the project asks three questions. 

SP1: What is a sustainable corporation?

Philosophers commonly explicate organizations in terms of the decision-making procedures they employ and the ways in which they distribute roles (French 1984, Tuomela 1995, Pettit 2017, Hindriks 2018). SP1 complements this with the idea that organizations have a normative profile, which can be evaluated in terms of the SDGs. The claim is that organizations have (or lack) norms, values and ideals that can (and ideally, should) be supported by members of the organization. For such a profile to be effective – for it to induce compliance – it must be regarded as justified. This idea will be developed for the case of corporations using theories of perceived fairness and legitimacy in combination with the literature on sustainable institutions (Bicchieri 2006, Hindriks 2019, Hindriks 2022).

SP2: How can finance contribute to the sustainable corporation?

The idea that shareholders and other providers of capital may have a positive effect on corporate behavior has become widely accepted. This is reflected in such initiatives as the European Commission’s (2018) Action Plan Sustainable Finance, which is a regulatory attempt to steer private funding to climate mitigation and adaptation (de Bruin 2022b). In spite of existing work on sustainable finance (Contreras 2019), a financial ethics that captures its full potential is still lacking (but see de Bruin 2015). Thus, SP2 asks how banks, supervisors and regulators can shape a financial environment that is conducive to an integrated approach to sustainability.

SP3: How can business law contribute to the sustainable organization?

To investigate how legal means can be used to promote a balanced and integrated conception of sustainability, the third part of the projects zooms in on two recent developments. First, both the US and the Netherlands (and other European countries) are developing a new kind of legal entity that is meant to be specifically suitable for realizing sustainable goals: the Public-Benefit Corporation (Dulac 2015, Lund 2021). The second development is sustainability litigation. For instance, in Milieudefensie v Shell, the company was ordered to decrease greenhouse gas emissions. But it remains to be seen whether courts (judges) are in the best position to weigh all relevance interests and values, which means that litigation might exacerbate the divisions between the different dimensions of sustainability. This underscores the need for sustainable business law (de Bruin 2022).

Methodology

This interdisciplinary project sets out to construct a theory that contributes to philosophy, law, and the social sciences, economics in particular. To this end, it combines analytical and theoretical tools from ethics and social ontology with theoretical and empirical findings from economics and business.

Output: A PhD thesis, four papers, two for SP1 and one for SP2 and SP3 each.

Institutional embedding

Faculty of Philosophy, Faculty of Economics & Business (University of Groningen) 

The student will be affiliated with the Centre for Philosophy, Politics, and Economics (PPE) and participate in the Sustainable Cooperation program (SCOOP).

PhD

Fabian Corver

Supervisory team

• prof. dr. Frank Hindriks (UG, Faculty of Philosophy)
• prof. dr. Boudewijn de Bruin (UG, Faculty of Economics & Business)

Location: University of Groningen 

References

Bicchieri, C. The Grammar of Society. (Cambridge University Press, 2006).

de Bruin, B. (2015) Ethics and the Global Financial Crisis: Why Incompetence is Worse than Greed (Cambridge University Press, 2015)

de Bruin, B. (2022a) The Business of Liberty: Freedom and Information in Ethics, Politics, and Law (Oxford University Press, 2022).

de Bruin, B. (2022b) Reflexive Law and Epistemic Virtues: The EU Sustainable Finance Action Plan, in Joakim Sandberg & Lisa Warenski (eds.), The Philosophy of Money and Finance (Oxford University Press, forthcoming 2022)a.

Contreras, G., Bos, J. W. B., and Kleimeier S. (2019), Self-Regulation in Sustainable Finance: The Adoption of the Equator Principles. World Development 122, 306-324.

Dulac, M. J. (2015). Sustaining the Sustainable Corporation: Benefit Corporations and the Viability of Going Public. Georgetown Law Journal 104, 171-196.

European Commission (2018), Action Plan: Financing Sustainable Growth (COM(2018) 97 final)

French, P. A. Collective and Corporate Responsibility. (Columbia University Press, 1984).

Hindriks, F. Collective Agency: Moral and Amoral. Dialectica 72, 3–23 (2018).

Hindriks, F. Norms that Make a Difference: Social Practices and Institutions. Analyse & Kritik 41, 125–146 (2019).

Hindriks, F. (2022) ‘Sustainable Institutions: Resilient, Valuable and Just’, (under review).

Lund, D. (2021). Corporater Finance for Social Good. Columbia Law Review, 121, 1617-1658

Macchi, C. and von Zeben, J. (2021) Business and Human Rights Implications of Climate Change Litigation: Milieudefensie et al . v Royal Dutch Shell, Review of European, Comparative & International Environmental Law 30, 409-415.

Pettit, P. The Conversable, Responsible Corporation. in (eds. Orts, E. W. & Smith, N. C.) 18–35 (Oxford University Press, 2017).

Shi, J., Duan, K., Wu, G., Si, H., & Zhang, R. (2021). Sustainability at the Community Level: A Bibliometric Journey Around a Set of Sustainability‐Related Terms. Sustainable Development, 1–19.

Tuomela, R. The Importance of Us. (Stanford University Press, 1995).

United Nations (2015). Transforming our World: The 2030 Agenda for Sustainable Development. (A/RES/70/1)