Sustainable development has correctly become a fundamental policy goal. Most governments have already committed to reaching the 17 Sustainable Development Goals (SDGs) by 2030, but considerable private investments are necessary for a real transition towards a more sustainable economy. At the EU and national levels, initiatives have been proposed or implemented to encourage companies and financial sector operators to pursue SDGs and other specific sustainability objectives. Against this background, a key concept is represented by ESG factors, i.e. factors related to environmental (such as climate change and pollution), social (e.g. human rights, labour conditions, gender equality) and governance (e.g. stakeholder voice, board diversity, remuneration).
Against this background, the PRIN project, funded by the Next Generation EU, focused on understanding ESG factors and exploring their implications for company law and financial regulation, assessing whether the current EU regulatory approach is adequate to lead to a sustainable transition effectively.
The Project
The first part of the project explores ESG factors' role in managerial decisional processes and corporate governance arrangements, particularly within Italian company law and in prospective reforms at the EU level. The EU Commission has promoted significant reforms, entailing the introduction of firms' duty to monitor ESG factors along the value chain and fiduciary duties of company bodies to implement sustainability goals. However, less prescriptive measures are available and worth exploring, such as recent experiences with national policies in this area, recommendations, increased disclosure, public and private incentives (including institutional investors' engagement) and self-regulation.
The second part analyses ESG factors' weight in investors' decisions, by assessing, in particular, whether EU financial regulation can spur sustainability by taking into account investors' preferences and, at the same time, ensure stability and investor protection. This analysis involves ESG disclosures, ESG ratings, investment firms' conduct, and organizational duties concerning ESG factors. Further, the project analyses the regulatory policy options at the EU and national levels to incentivize investors to integrate ESG factors into their investment and engagement strategies.
Expected Outcomes
providing a clear picture of ESG factors and their role in both companies’ decisions and investment processes;
assessing the current and proposed EU and Italian legal framework in the company and financial regulation areas, to address the main issues related to ESG factors and meet corporate governance and investor protection objectives;
providing suggestions to face the challenges that remained unanswered or partially solved by such a legal framework.
The missing part of the academic debate relates to how the legal system can steer the economic system to pursue sustainability. Exploring the legal determinants of such impact will allow identifying optimal rules for sustainable economic growth. This will also contribute to sustainable corporate governance and finance theory and practice, changing how economists and legal scholars consider integrating ESG factors into corporate and investment decisions.
Research Units
The project, led by the University of Genoa – School of Laws, involves other four research units: the University of Rome “La Sapienza”, the Trento University, the Catholic University “Sacro Cuore” of Milan, and the University Bocconi of Milan.
More information about the Project's members
Steering Committee
The project activities are overseed by a steering committee composed by Lucia Alessi, Claudia Guagliano, David Ramos Muñoz, Konstantinos Sergakis.
Information on past and upcoming events is available here.
Information on project's publications is available here.
PRIN 2022 Project: Tackling social-and green-washing: is the current EU regulatory framework enough? (Project Code: 2022SL3RRM) – Financed by the European Commission Next Generation EU