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Abstract

This thesis is a contribution to the debates on corporate purpose and governance and the role of corporate law in the context of increasing demands for corporate accountability pertaining to environmental, social and human rights issues including collective societal challenges, such as climate change. The outward interactions between the corporation and its societal context are generally left outside the scope of concerns addressed by corporate law. The extraeconomic issues that emerge in the context of corporate conduct pertaining to social, environmental and human rights issues are expected to be addressed by other legal regimes, such as environmental, tort, and human rights law. The thesis argues that such corporate externality, or the costs emanating from corporate practices and born by society, cannot be addressed by ex-poste interventions through these other legal regimes so long as corporate law remains intact and unreformed. The thesis demonstrates how the set of incentives emanating from the dominant features of corporate law fuels the corporate externality, while the other legal regimes are not fully equipped to address this corporate externality. The thesis proposes change that starts from the theory underpinning the conceptualization of the corporation and the role of corporate law, in ways that would allow accounting for the elements of power, control and influence within the corporation and by the corporation vis-a-vis its societal context. It also posits the need for a series of changes in corporate law that alter the incentive structure shaping corporate decision-making to better align it with the collective societal concerns.

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