Corporate governance and market efficiency

Corporations are key drivers in the process of economic activity that has both increased economic living standards through production of goods and services but also caused substantial emissions of greenhouse gases as a by-product of that production process. The latter has seen a gradual warming of the planet, which now seems likely to pose significant risks to future living standards, as well as to biodiversity. A major question now is to what extent the corporate form itself is, or can be, responsive to these risks from climate change. Consideration of this issue involves analysis of the corporate governance framework as well as the legal structures of proper accountability of management and of the corporation to shareholders, to securities markets and to wider society. Importantly, the obligation to keep shareholders and securities markets properly informed of risk has become an area of increasing attention in recent years. Risks to revenues and costs from climate change, as well as from the decarbonisation transition process, are legally required to be disclosed, as both a climate issue and an investor protection issue. The rise of multi-million-dollar non-disclosure class actions as well as increased focus from securities regulators confirms this imperative.