Discussion Dinner with Dan Puchniak, Professor of Law at Singapore Management University
Christ’s College, University of Cambridge, 18 September 2023
On 18 September, the Centre for Climate Engagement (CCE) hosted a discussion dinner with Dan Puchniak, Professor of Law at Singapore Management University. A select group of academics and practitioners with expertise in climate change, corporate governance, and law gathered at Christ’s College to discuss concepts of corporate purpose, how they interact with climate change, and how this differs around the world. Professor Puchniak opened the discussion by presenting on topics explored in his paper ‘No Need for Asia to be Woke: Contextualizing Anglo-America’s “Discovery” of Corporate Purpose’’, for which he was recently awarded the 2023 European Corporate Governance Institute’s 2023 Law Prize.
Given the important role companies play in reducing greenhouse gas emissions, corporate purpose has implications for climate action. Are corporations only vehicles for creating shareholder returns, do they have any obligations towards wider society, and what legal mechanisms can help realise these ideas of purpose? Drawing on examples from China, Japan, India and Singapore, Professor Puchniak explained that a broader concept of purpose is not a new idea in much of the world. In China, employees have been recognised as important stakeholders since 1994, and environmental goals are enshrined in China’s Corporate Governance Code. Japan, on the other hand, introduced some reforms bringing the country closer to embracing Anglo-American shareholder primacy, but in practice retained a stakeholder-orientated system. Courts in India have, for decades, viewed shareholders as only one type of stakeholder to which companies owe duties. Finally, despite being shaped by many of the same concepts that prevail in the UK and USA, Singapore has thrived using a model where the Government is the controlling shareholder in many public companies.
However, just as a strict application of the Friedman Doctrine may lead to perverse outcomes, more purposeful systems can also lead to issues seen in some of the jurisdictions mentioned. Professor Puchniak did not seek to determine whether one model is better than the other, but emphasised that we must recognise this diversity in approaches and be sensitive to regional differences when addressing climate change through corporate action.
Reflecting on the presentation, guests agreed on the importance of recognising differences between, and indeed within, different regions of the world. Assessing the impact of these differences, however, is not simple. Attendees highlighted the difficulty in determining the extent to which corporate law regimes are responsible for a country’s economic situation, and particularly in isolating the impact of specific provisions. This discussion is relevant to directors’ duties to promote the success of their company, but attendees noted the difficulty in enforcing these duties in practice. Instead, some argued that disclosure regulations, such as those requiring implementation of the Taskforce for Climate-related Financial Disclosures (TCFD) recommendations, might offer a more realistic route for corporate accountability for climate impact. Other guests pointed out that company law in general can only have limited impact on climate change, and that a greater part of the solution may lie in more effective environmental regulation and enforcement.
At the end of the discussion, guests considered the importance of climate change to younger generations, and how that is reflected in the actions and desires of students, junior lawyers, and other young professionals. There was general agreement about these intentions, but opinions differed on the extent to which pressure from younger generations can overcome certain technical barriers to decarbonising society. The broad range of issues discussed reflect the complexity of addressing climate change through corporations, and the need for diverse and nuanced perspectives to overcome this challenge on a global scale. The CCE will explore many of these issues as it continues to build its academic community, and deliver its Law for Climate Action and Climate Governance programmes.