From Fiduciary Duties to Management Standards: Rethinking the Corporation for Sustainability

As companies are increasingly expected to address ecological impacts and support green transitions, a key question arises: can standards be developed to assess whether management decisions align with ecological transitions? How can such standards be defined, and under what conditions can they be effective? This paper examines how corporate law shapes the role of managers and what is expected of them. We argue that as long as managers are legally required to pursue the interests of the corporation, management decisions that obstruct ecological transitions will remain almost impossible to challenge in court. We observe that reforms such as increasing stakeholder participation or mandating non-financial reporting do not fundamentally revisit how corporate leaders are expected to manage activities. However, proposals, building, for instance, on corporate purpose or fiduciary duties, are emerging to redefine the criteria for assessing managerial decisions. To capture these diverse efforts, we propose the concept of the management standard. A management standard delineates the criteria that distinguish legitimate sustainable management decisions from misconduct. It provides a basis for accountability and establishes a governance mechanism that is fundamentally different from, yet complementary to, the sharing of voting rights. We identify both the legal and cognitive conditions under which management standards can effectively hold managers accountable for facilitating transitions, enabling us to critically evaluate the various emerging proposals. Drawing on concrete empirical examples, we argue that the concept of the management standard offers a novel lens to rethink the corporation for ecological transitions.