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The case for sustainable investment

International panel explores the challenges of corporate sustainability.

The increasingly-important topic of sustainable investment was the topic of a recent seminar hosted by Deakin Law School (DLS) and its European research partner Sustainable Market Actors for Responsible Trade (SMART).

With investment from fossil-fuelled to renewables-based business now a key tenet of the UN Sustainable Development Goals, Investing for Sustainability: Drivers and Enforcers explored some of the barriers to the transition and strengthening of emerging sustainability trends.

Organised by DLS’s Professor Jean Du Plessis, the seminar showcased four specialist speakers who presented contemporary global research, perspectives and practices.

Prof. Du Plessis said the current focus in most countries, especially for large public companies, is now on long-term sustainable business.

‘Investors now insist that these companies demonstrate they are responsible corporate citizens. That is the driving force behind companies focusing on long-term sustainability. The purpose of the seminar was to inform the public about the importance and significance of this topic.’  

Presenters included Sarah Barker (Special Counsel, MinterEllison, Melbourne), Professor Beate Sjåfjell (University of Oslo and Professorial Research Fellow DLS), Professor Gill North (Professorial Research Fellow DLS) and Professor Andrew Keay (Leeds University School of Law and Professorial Research Fellow DLS).

                                          Left to right: Professor Jean Du Plessis, Professor Beate Sjåfjell, Professor Jenni Lightowlers, Professor Andrew Keay, Professor Gill North and Sarah Baker

In her presentation Climate Risk: a Commercial Obligation, Sarah Barker (MinterEllison) covered the topics of fiduciary duties, and reporting and disclosure.

‘Directors have a fiduciary duty to proactively and critically evaluate the material financial risks (and opportunities) to their corporation (fund) associated with sustainability,’ she said.

Ms Barker also spoke about the increasing focus on climate-related disclosure risks, the demand from investors and G20 recommendations.

Professor Beate Sjåfjell is Professor Dr. Juris at the Department of Private Law, University of Oslo, a Professorial Research Fellow at DLS, and project co-ordinator of SMART.

Based at the University of Oslo, SMART is a research centre which analyses European regulatory complexities to find out what prevents – and promotes ­- sustainable development.

Professor Sjåfjell’s presentation Beyond Climate Risk: Integrating Sustainability into the Corporate Board examined the boundaries of climate change and the social and ecological balances needed for a ‘safe and just space for humanity.’

‘We can manage to mitigate climate change and still destroy the very basis of our existence…there are other non-negotiable ecological barriers that don’t care about colourful sustainable development goals,’ she warned.

Prof. Sjåfjell explained that there is a ‘grand challenge’ for humanity that goes beyond climate risk.

‘We need to secure the social foundation of people everywhere – both now and in the future – while staying in the planetary boundaries.’

Professor Gill North, a Professorial Research Fellow with DLS who is also a chartered accountant and experienced financial analyst, presented Corporate Management and Reporting of Environmental and Social Risks: Paradigm Change or Window Dressing?

Examining the management and reporting of corporate risk, she noted that the area receiving most attention was climate change risks while the area considered most challenging was social risks, such as human rights.

‘But corporate risk legal structures are weak.  They’re largely reliant on reporting policies, underpinned by shareholder value and often poorly supervised and enforced,’ she said.

However she added there were now some ‘emerging positives’ including collaborative activism by investors, civic groups, multinational entities and regulators.

‘This is prompting real changes in behaviour and culture. The pressure on corporations to improve … is building.’

In the final presentation, Professor Andrew Keay (School of Law, University of Leeds, UK) outlined his work from Sustainability in Large UK-Listed Companies: A Sectoral Study.

A professor of corporate and commercial law in and a barrister at Kings Chambers, Prof. Keay specialises in corporate law, insolvency law and corporate governance and is also a Professorial Research Fellow with DLS.

His study explored the position taken by three of the UK’s largest companies – Marks and Spencer, Kingfisher and Next – on sustainable issues.

‘We found that companies are engaged in redesigning their strategies in order to address those things that are at the root of unsustainability. It’s gone beyond fostering sustainability for the competitive benefits … and appears to have become more of an ideological commitment,’ he said.

An interactive panel and audience discussion concluded the seminar and Prof. Du Plessis said corporate sustainability was an important topic that requires ongoing debate, discussion and information.

‘The highlights from this seminar were the international and practical perspectives. It also illustrated that in the future, corporations will have to report on non-financial matters. Currently, the only mandatory reporting is on financial performance. However now, companies will also have to report on social matters such as treating their employees fairly, providing a safe working environment, not breaching human rights, fulfilling corporate social responsibilities and protecting the environment.’

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