14 April 2023 - Part 2 -The second in a series of four reports, from Phase 1 of “The Future of Boards” research study by the University of Cambridge Institute for Sustainability Leadership (CISL), in partnership with the global law firm DLA Piper, this report explores the changing legal context associated with sustainability, the underlying drivers and the practical implications for corporate boards.
31 March 2023 - The first in a series of reports from Phase 1 of “The Future of Boards” research study by the University of Cambridge Institute for Sustainability Leadership (CISL), in partnership with the global law firm DLA Piper, this report sets out the context, rationale and theoretical underpinning for the study, as well as the research design of this two-year project.
Download The Future of Boards Phase 1, Part 1.
The research explores key trends in how board practice and the wider legislative environment are changing around the world; how aligned with a sustainable future these trends and their drivers are likely to be; and the practical implications for boards.
In this volatile and complex world, boards are facing growing pressure and scrutiny from a range of stakeholders arising from the perceived risks to financial income and the profound influence of companies on wider society and the environment. This is manifesting in a raft of new disclosure requirements, performance expectations and associated ratings. Stewardship by investors is growing, with activist investor pressure on companies to improve ESG (environmental, social and governance) performance at record levels. Companies and their boards also face intense market competition and pressure to maintain high financial returns to shareholders.
Download The Future of Boards Phase 1, Part 2.
This report explores the evolving sustainability-related legal trends in corporate and financial law frameworks and corporate governance regulation across a sample of 13 jurisdictions and examines how aligned with a sustainable future these trends are likely to be. It also identifies the drivers of these trends, their pace of change, and the resulting practical implications for corporate boards.
This comparative analysis of existing law enables us to gain insights into the legal context within which boards are currently operating, and are likely to operate, in the future. To achieve a sound proxy for making global conclusions, we researched 11 jurisdictions across six continents, in conjunction with DLA Piper: Australia, China, Colombia, Hong Kong, Japan, the Netherlands, Singapore, South Africa, Sweden, the United Arab Emirates (UAE), and the United Kingdom (England and Wales). Additionally, we also examined legal developments in the United States (specifically the state of Delaware) and captured relevant legal changes in European Union law, as an example of a supranational jurisdiction.
Given the vast number of regulations having sustainability implications, the scope of the investigation was limited to five areas of law: company law, supply chain due diligence, sustainability disclosure requirements, securities law and listing rules, and corporate governance codes and stewardship codes.
The focus of this report is on the internal rules of company and financial law, which affect the establishment, management and conduct of companies from a general perspective and govern their interaction with stakeholders (e.g. shareholders, directors, employees, community, the environment) and their financial market relationships and transactions.
Our research has been designed to support practically boards in this challenging environment, so that they can assess and navigate these multiplying risks and respond appropriately.
The research has three main aims:
- to identify trends in board practice and the related legislative environment including drivers, likely trajectories and pace of change
- to evaluate whether these trends are likely to support or hinder boards aligning business success with a sustainable future
- to provide evidence-based and globally relevant practical recommendations for boards and those that support and/or enable their practice (for example, advisors or legislators).
The research draws from primary and secondary data to understand trends and uses a bespoke sustainability framework to understand whether or not these trends are likely to support or obstruct the alignment of business success with a sustainable future. A sustainable future is understood as one where where everyone’s wellbeing is optimised which requires healthy social and environmental systems.
The research is being carried in two phases.
Phase 1, explores the evolving and emerging trends in board practices and capabilities, and the related legislative contexts. It is divided into three parts:
- Part 1: Foundation and Methodology, sets out the context, rationale and theoretical underpinning for the study, as well as the research design
- Part 2: Legal and Regulatory Frameworks for Sustainability, explores trends in both ‘hard’ law (legislation and case law) as well as ‘soft’ law (such as codes and guidelines), which relate to areas of broad sustainability concern. The comparative analysis provides insights into the legal context within which boards are currently operating, and are likely to operate, in the future, and enables us to evaluate which trends, that are aligned with a sustainable future.
- Part 3: looks at trends in board practice, including those in response to this evolving legislative context and wider pressures to achieve sustainability outcomes. These three domains are:
- materiality, purpose, strategy and disclosure
- board membership, structure, individual capabilities and group dynamics, and
- stakeholder engagement (including investor interface).
What's next?
The technical reports detailing the findings from part 3 will be published later this Spring followed by a summary of key findings from Phase 1, presented in a Research Summary for Business.
Phase 2 of the research which will explore and evaluate key findings from Phase 1 in greater depth to produce recommendations to enable boards to better align organisations with sustainability outcomes, and positively contribute to a thriving future for all.
Authors and Acknowledgements
Report 1
CISL Future of Boards Research Team: Dr Pamela Buchan, Steven Day, Dr Louise Drake, Emma Eteen, Seeraj Gajadhar, Dr Victoria Hurth, Dan Mocanu, Aileen Noonan, Gillian Secrett, Dr Livia Ventura, Andrea Westall.
Our thanks to the following members of CISL and DLA Piper for their input and support: Susie Beales, Richard Calland, Jean-Pierre Douglas-Henry, Amy Gatenby, Ian Hagg, Lindsay Hooper, Gianna Huhn, Natasha Luther-Jones, Sarah Millar, Megan Peachey, Stephane Rad, Kelly Sporn, Alex Tamlyn, Rachel Taylor, Eliot Whittington, Adele Williams.
Report 2
Lead Authors/Researchers: Dan Mocanu, Livia Ventura
Editor: Andrea Westall
CISL Future of Boards Research Team: Dr Pamela Buchan, Steven Day, Dr Louise Drake, Emma Eteen, Seeraj Gajadhar, Dr Victoria Hurth, Dan Mocanu, Gillian Secrett (Lead), Dr Livia Ventura, Andrea Westall
Our thanks to the following members of CISL and DLA Piper for their input and support: Susie Beales, Richard Calland, Jean-Pierre Douglas-Henry, Amy Gatenby, Ian Hagg, Lindsay Hooper, Gianna Huhn, Natasha Luther-Jones, Sarah Millar, Megan Peachey, Stephane Rad, Kelly Sporn, Alex Tamlyn, Rachel Taylor, Eliot Whittington, Adele Williams
Thanks to all DLA personnel who contributed to the questionnaire.
Citing these reports
Part 1: Foundation and Methodology
University of Cambridge Institute for Sustainability Leadership (CISL). (2023). Future of Boards Foundation and Methodology (Phase 1, Part 1).
Part 2: Legal and Regulatory Frameworks for Sustainability
University of Cambridge Institute for Sustainability Leadership (CISL). (2023). Future of Boards Legal and Regulatory Frameworks for Sustainability (Phase 1, Part 2).
The research is being carried out with funding from, and in conjunction with, the global law firm DLA Piper, which is assisting CISL in identifying sources of data and gathering insights from multiple locations around the world and providing guidance and advice as the project progresses.
