Maëlyss Barranco

Can we Make Companies Sustainable? - UIO Professor and Expert Beate Sjåfjell Talks Businesses, Sustainability and the Law.

Climate Change, Human Rights and Sustainability are the most important topics of our time. And companies and corporations have to date been a huge part of the issue, with many committing rampant human rights abuses in supply chains and just 100 companies being responsible for 70% of global emissions.
But how can we ensure companies are held accountable? What can we do to change this situation? And can businesses be transformed from villains to heroes in the fight against climate change?

To find out, we spoke to one of the pertinent experts in this field, Beate Sjåfjell. Beate is a University of Oslo Professor and head of the Research Group ‘Sustainability Law’. She has been researching company law and sustainability for more than 20 years and is one of the founding voices in the innovative and vital field of corporate sustainability law. This journey to the top however was not without its barriers, to see how she overcame these please see our accompanying piece about « Fighting Patriarchal Dynamics in Business Law: A Conversation with Beate Sjåfjell »

What inspired you to work in the field of corporate sustainability law?

I started studying law because I wanted to become a practicing lawyer. I watched all of these law series that were popular at the time such as LA Law and Judging Amy and I would lie in bed in the evening and envisage that I was in a courtroom and asked just the right question at just the right time.

I had no idea at all that I would end in academia, I actually didn't know much about what professors actually did besides teaching. I'm not from an academic family, so I didn't have that kind of background to understand that. In the last part of my law studies here in Oslo, I wrote a student thesis, it wasn't obligatory for everybody and there weren't any page limits, so I could really just let myself go. It is really then that I fell in love with research, I wrote quite a long student thesis and it was published as a book.

At that stage it was still so clear in my mind that I wanted to work in practice at one of the big law firms here in Oslo because that was why I had studied law in the first place. And indeed, one of the law firms had tried to recruit me from quite an early stage. I was pleased by the offer, but I also wanted to write my doctoral thesis. I was not sure which order to do it in. So they said, well, write your doctoral thesis and then come to us.

Therefore, I chose a business law area because I was going to work in one of the big law firms, so it was a very good background to have. But during those years with my doctoral thesis, I realised that this is what I want to do for the rest of my life.

I had this assumption that I took with me into that thesis, that in any area of law we should always check whether people and the environment are considered. We need the environment to live, and I care about us as humanity, so with this assumption I moved on to the important work of analysing these rules in the specific area of business law. That then became the theme of my whole doctoral thesis which was published later under the title of ‘Towards a Sustainable European Company Law’. Unfortunately, it is still as relevant today as when it was published in 2009. We are still working to try to make business law sustainable in the sense that it contributes to ensuring that business contributes to a sustainable planet, a sustainable future for all of us.

So I completed my doctoral thesis and then already before I was finished, I had an idea that it would be really fun to continue working with this and to have a project so that I could work together with other people from other countries. I applied for funding for that project from the Research Council of Norway that funds research projects in various areas.

They gave me funding after the second attempt for the project that we called ‘Sustainable Companies’. We started that project in 2010 and that grew to be a really big international project. We were then able to find out more about what does business law do and what doesn't it do in different countries. Is the law the problem or is the problem that business operates in an unsustainable way in spite of what the law says or what the law allows them to do? That was the start.

Is that why you went as a visiting academic Deakin and to Berkeley? Why did you chose Australia and the US and those universities?

I travelled to Australia because I was invited to come there and speak. I thought it was a very good opportunity to engage with colleagues there as well.

I went to Berkeley for a full year as a part of my sabbatical, which is what we call it when we professors have a year off from teaching and concentrate on our research. I was then coordinating my second very large project, Sustainable Market Actors for Responsible Trade, the SMART project. This was not just about business law and businesses, but more broadly about what we call economic actors such as banks, pension funds, the state and local communities and public procurers who buy things and influence businesses in that way for good or for bad.

It seemed like a very good opportunity to engage more with what is happening in the US and be able to do some more comparative work which resulted amongst other things in a book called the ‘Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability’, where together with a US colleague brought together scholars from different countries in the world to see what is happening now and what still needs to change.

Drawing on those experiences, how do you think it compares promoting sustainability in corporations in the EU compared to the US, Australia and other places internationally?

Well, in spite of all its weaknesses, the European Union is really in the forefront here.

So to the extent that we can generalise it is easier to discuss sustainability and to work to integrate sustainability in business in Europe compared to elsewhere, although there are differences also between the different member states and between sectors.

In the US, things seem to be going backward. There's been this huge backlash against what is often popularly called ESG (environmental, social and governance issues) which covers some of the same issues as sustainability. So there it is getting so difficult to forward the implementation.

I've heard that that ESG hushing has become a concept in the US. ESG or sustainability hushing, is when companies try to hide the fact that they are trying to be more sustainable in order to keep their US-based investors. This causes significant issues. But of course they are also there many people who are trying to work for change for the better in the US but their ability to do so depends on the political climate and how that develops.

How do you feel on a personal level seeing the backsliding with terms of sustainability?

Well, it's disappointing, of course, but it's not really surprising because there are very, very strong vested interests.
What I see as a main barrier in this area to sustainability, is the idea that the best thing for companies and for society is to maximise profits for shareholders and other investors. This doesn't come from actual law, but it comes from Anglo-American law and economics inspired ideas.

This set of ideas is based in in a specific type of economic thinking that has given us the myth that shareholders own companies and companies are vehicles for profit for the shareholders and that this will maximise societal welfare. I saw it in when I was working my doctoral thesis and I still draw the same conclusion today, that this misconception is the main barrier for sustainability in companies. And that this is also a very strong driver for the pushback that we see now.

But I don't see the push back only as negative because we are talking about such fundamental change and really challenging these vested interests, these powers that have been allowed for several decades to just dominate the field.
Allowed to just say, yes we'll maximize profits for shareholders because that is good for society so through that we also maximize societal welfare. These have been touted as this kind of established truth, in spite of the empirical data showing over and over again none of that works as they think it does. That in fact it’s actually just terrible for the environment, for people, for society.

So it's natural that when things are changing fast now that there is a reaction. But what decides what kind of future we will have is what happens at the end of this debate.

I see a lot of good signs as well. When I started working on my doctoral thesis, I was told by a professor working in company law that I couldn't include environmental issues or human rights in a thesis on company law. Nobody had done that before, so it couldn't be done. I was in the wrong department and writing on the wrong topic. If I wanted to write about environment and human rights, I should go somewhere else and do that.

And when I started working in this area, then most businesses weren't interested in that, but now it's difficult to find a business that will say that they aren't interested at all.

So sustainability has become an accepted overarching societal goal and the adoption of the United Nations Sustainable Development Goals in 2015 and the Paris Agreement on Climate Change in the same year has helped a lot there. It is hoped that this acceptance will continue to spread.

So is the only way to achieve sustainability is through law and through the EU, UN and governments?

No, I don't see it as the only way.
I see it as an important part of what I envisage as a jigsaw puzzle of sustainability.

So law and company law are important pieces that still need to be fully clicked into place. But there are many other ways of regulating and influencing behaviour that are an important part of it. Another vital aspect is changing social norms, what people see as important and what they see as good and right or as bad and wrong, that is a very important part of the change. As this also influences how the law will change.

How do you think people who are distant from politics and from law, can be interested and active in this topic ?

Well, I think the interest comes more now to people because we are starting to see that, climate change is not some hypothetical future threat that we can discuss but a present reality. We are starting to see impacts everywhere, including Europe, which I think is very important. It's important that the negative impacts are not only happening in low-income countries because the vested interests in Europe and in the US, have many decades of practice in ignoring suffering in formerly colonised and still neo- colonised countries. So, sad as it is to have to say that: we need these dramatic floods and landslides and forest fires. We need that in Europe for people to wake up.

I hope that now the positive change will happen fast enough that we can mitigate a lot of the future suffering. I also think modern media forms change how people see this, that they see that it's something that concerns all of us. It affects food security, it affects medicine security, and they can see it all up-close through social media. Suffering in other countries is being brought much closer to us, although of course we're being overloaded with lots of noise also.
But I think that there have hugely positive public campaigns. For example, the Norwegian NGO Future in Our Hands who made a TV programme bringing young teenage girls from Norway to these factories with otherwise invisibilised workers in the textile industry to see how clothes actually are made. Those kind of initiatives really bring these things home.
So I think people in general are becoming more and more aware. But then, of course, then there's also polarisation there and sometimes it just gets too difficult for people to take it in or they feel that their lives are difficult enough that they can't think about it. It's not a linear development.

But what people can do... we all can contribute in different ways. The most important thing is how people vote, because the governments and parliaments that we get both on a national level and in the EU are a huge deciders as to how the future will look.
And then all the small and big choices that we make. What we decide to buy or when we decide that we actually don't need to buy anything. Growing food instead of lawns. Trying to be more environmentally friendly, trying to care about who made these products that we are buying, and how were they treated, they have a great weight.
And there law has a huge role because it is has been incredibly difficult to be a sustainable consumer, because it's been so difficult to find the right information. Although now that is becoming easier and easier, we still have a long way to go.
Law is facilitating that it's easier to reduce consumption, giving us right to repair and giving companies a duty to keep spare parts. So there's this a lot of interaction between law and social norms.
And then I think I believe very much in talking about these things. I think that if somebody never hears about an issue in their daily life, it's difficult for them to really see it as a major issue when they suddenly see something in the newspaper.
But it's a part of the conversations that we have with each other, we internalise it more as an issue that we actually care about. So newspapers, media, radio, are all incredibly important.

Click here ( if you want to learn more about Beate and her group’s vital work in this field.

Beth Brittin & Maëlyss Barranco