ESG and Stakeholder Capitalism as Tools for Energy Transition

The recent rise of “stakeholder capitalism” shows the way forward to solving today’s energy crisis and working toward a carbon-free future. Are companies and governments up to the challenge?

Trees fill two silhouettes shaking hands

Javier Cremades

September 30, 2022 12:00 AM

The shift away from shareholder primacy toward so-called “stakeholder” governance has been the subject of intense discussion not only in boardrooms but also throughout academia, regulatory agencies and national legislatures. The traditional Milton Friedman doctrine of shareholder primacy has been eroded to some degree by the new stakeholder paradigm, as codified in the 2020 Davos Manifesto, “The Universal Purpose of a Company in the Fourth Industrial Revolution.”

This transition has been decades in the making, with companies now increasingly considering environmental, social and governance issues (ESG), as well as sustainability and long-term growth. Viewed through this lens, the fundamental purpose of for-profit corporations—and, accordingly, the decision-making calculus of their boards—must include value creation. Companies do not exist in a void, after all, but in a complex ecosystem of stakeholders. These days, it’s essential that a corporation consider its commitment to those stakeholders’ values—and, in parallel, that executives speak up for responsible, sustainable development and the rule of law. In times of global crisis, amplified by the megaphone of social media, companies no longer have the option to sit on the sidelines.

Consider the recent worldwide spike in energy prices, for example. It offers important lessons, underscoring the need for debate about a nondisruptive transition to a low-carbon world and less dependence on imported fossil fuels. Major countries’ commitment to an accelerated path toward climate neutrality will be the most effective instrument to stimulate economies, reduce energy costs and avoid energy security problems down the road. However, current global instability, with protectionist measures on the rise and geopolitical tensions exacerbated by Russia’s invasion of Ukraine, make this an inauspicious moment for multilateralism. Under these circumstances, where the incentive for a global and coordinated response is undermined, and the legal security required by private sector is challenged, the contribution of the private sector, its commitments and business decisions—as a global actor—will be more than ever a key indicator on how successful we are on addressing the climate change global challenge.

Bearing in mind that in the short-term Europe will not be able to reduce its energy dependence on others, Europeans are nonetheless obliged to diversify their resources to guarantee steady supplies. In the mid- and long term, however, the solution must be self-sufficiency through the transition to cleaner energy, though this will require considerable investment over many years. As such, global corporations need to commit to addressing the challenge of climate change.

Business leaders and investors across Europe have endorsed the ambitions of the European Green Deal."

Global and local climate targets, typically tied to goals ideally achieved by 2030 and 2050, necessitate greater private investment in renewables, which will reduce greenhouse-gas emissions and contribute significantly to the fight against climate change. At the national level, renewables will help guarantee price stability and promote energy independence, making future supply crises less likely.

All this helps explain why companies committed to ESG and stakeholder capitalism have a major role to play. Business leaders and investors across Europe have endorsed the ambitions of the European Green Deal; in a recent open letter with more than 200 signatories, companies including Microsoft, IKEA, Iberdrola, Unilever and Deutsche Bank outlined their determination for a climate-resilient global recovery.

For the European Union, meanwhile, the most effective way to achieve energy self-sufficiency is to accelerate the transition in every dimension: increasing the use of renewables, promoting energy efficiency and improving new technologies, in particular green hydrogen. These objectives underlie the European Commission’s REPowerEU plan, unveiled this May, which reinforces the objectives outlined in the “Fit for 55” communiqué, under which the EU will reduce its net emissions by 55% by 2030.

The rise in energy prices is a great cause for concern, and a major challenge to the energy transition process. Businesses and governments alike must implement corrective measures without jeopardizing the progress already made. The European energy market, studies show, has worked very effectively, particularly for encouraging investment in renewables. The current problems are a result of rising gas prices; they must be solved with specific measures, in particular toward vulnerable sectors, like families, households, small and medium-sized enterprises, the self-employed and, very importantly, industry.

Europe began its energy transition two decades ago and has already achieved important results, notably the fulfillment of the objectives set for 2020 and the positive forecast for those of 2030. The EU has the world’s most complete set of legislative tools and financial instruments to decarbonize by 2050. Although the current crisis presents significant risks, Europe unquestionably has the capacity to overcome them and accelerate this critical process.

Javier Cremades is a Spanish attorney, founder of the international law firm Cremades & Calvo-Sotelo and President of the World Jurist Association. Javier is a regular speaker and commentator at law seminars and conferences pertaining to his field of expertise.

Headline Image: Istock/Holwichaikawee, IStock/Petmal

Related Articles

Navigating Rough Waters

by Roberto Ovalle and Sergio Díez

Chile has a solid foundation to welcome and protect foreign investment even in turbulent times. Its strong network of international treaties helps provide stability beyond the political contingency.

Boat weathers rough waters in bottle

Caveat Sanctions and Export Controls

by Carsten Bormann and Stephan Müller

Increasingly strict global sanctions and export-control regulations add a new layer of potential peril to M&A deals. A guide to expanding due diligence to ensure that malfeasance, whether intentional or accidental, doesn’t end up scuttling the agreement.

School of fish attack shark

Best Law Firms® Research Has Begun

by Best Lawyers

Best Law Firms® rankings are annually produced awards recognizing the top law firms across the United States. We are here to offer insight into the submission process for all eligible firms.

Black background with colorful squares and faces

Best Lawyers Voting Is Now Open

by Best Lawyers

Voting has begun in several countries across the globe, including the United States, the United Kingdom and Europe. Below we offer dates, details and answers to voting-related questions to assist with the voting process.

Hands holding smartphone with five stars above phone

Best Lawyers’ Purely Pure Voting: Authenticity and Trust Through Decades of Tradition

by Best Lawyers

Larry A. Campagna of Chamberlain Hrdlicka met with Best Lawyers CEO Phillip Greer to discuss how trust and peer-review feedback are pivotal to building authentic relationships with colleagues in the legal industry.

Hands shaking with silhouette of professionals

Honoring the Integrity of Best Lawyers’ Purely Peer Review Voting Process

by Best Lawyers

Best Lawyers CEO Phillip Greer sat down with attorney J. Keith Hyde of Provost Umphrey to discuss how peer review plays a role in building relationships and establishing accountability in the legal industry.

Five gold stars with a magnifying glass hovering over the right star

The Evolving Reproductive Landscape

by Justin Smulison

The Supreme Court’s thunderclap Dobbs decision sent abortion policy nationwide into utterly unfamiliar terrain. The ruling also has a colossal effect on surrogates, intended parents and anyone involved in family planning given the patchwork of state laws likely to emerge. What’s a family law attorney to do?

Couple attends surrogate ultrasound

Estate Plan Implications in Divorce

by April Will and James Vedder

It’s essential that family law practitioners consult with estate planning attorneys as they guide their clients through a marital breakup. Here’s what to what to consider when there is a trust, but the parties do not trust each other.

Two figures shaking hands

The Quarter-Century Childhood

by Joseph Trotti

In recent years, proposed and enacted laws have significantly expanded parental obligation for child support, receiving little attention. Even if well-meaning, they have their flaws, beginning with reduced parental rights.

Child helping individual plant flowers

Clients with Appeal

by Michele M. Jochner

It’s frustrating to lose a case you’ve worked hard on. When considering whether to take an appeal of that ruling, here’s what to keep in mind—and how to enable your client to make that decision.

Client faces stacks of legal papers

Mike Morse Law Firm’s 90-Day Digital Transformation Disrupts Status Quo

by John Georgatos

Mike Morse Law Firm's Chief Information Officer is shedding light on the firm's 90-day digital transformation.

Up close image of a multicolored eye

2023 Best Lawyers Mexican Awards

by Best Lawyers

Announcing Mexico's 2023 recognized lawyers and firms.

Green, white and red stripes with symbol in center

New York City To Clarify Employer Artificial Intelligence Laws

by Gregory Sirico

Best Lawyer weighs in on New York City's current legislative battle to clarify the extent of artificial intelligence laws in an employment setting.

AI worker stands in front of line of people


Embedded Advantage: The Value in Partnering with Appellate Counsel

by Justin Smulison

Most litigants should expect the non-prevailing party in their case to challenge the trial court’s final judgment in post-judgment motions and/or on appeal. Robert A. Mandel discusses how aligning with a seasoned appellate lawyer can make all the difference in securing a favorable resolution.

Headshot of male lawyer with brown hair in dark suit

A New Spin on Continuing Legal Education

by Sara Collin

Attorney Humira Noorestani is launching a program for continuing legal education, one that she’s dubbed the “Netflix of CLE,” allowing lawyers in the U.S. to explore legal knowledge from prominent lawyers around the world.

Hands emerging from computer and cellphone screens

South Florida’s Legal Renaissance

by Gregory Sirico

What was once only thought of as a destination for vacation may now be the top legal market in the country, attracting talent from around the world.

Blue and orange block sections with gavels and busts

Trending Articles

Announcing the 2023 The Best Lawyers in America Honorees

by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

Best Lawyers: Ones to Watch in America for 2023

by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

The Best Lawyers in South Africa™ 2023

by Best Lawyers

Best Lawyers proudly announces lawyers recognized in South Africa for 2023.

South African flag

Could Reign Supreme End with the Queen?

by Sara Collin

Canada is revisiting the notion of abolishing the monarchy after Queen Elizabeth II’s passing, but many Canadians and lawmakers are questioning if Canada could, should and would follow through.

Teacup on saucer over image of Queen's eye


2022: Another Banner Year

by John Fields

Block O’Toole & Murphy continues to secure some of New York’s highest results for personal injury matters.

Three men in business suits standing in office

Famous Songs Unprotected by Copyright Could Mean Royalties for Some

by Michael B. Fein

A guide to navigating copyright claims on famous songs.

Can I Sing "Happy Birthday" in Public?

Announcing the 2023 The Best Lawyers in Canada Honorees

by Best Lawyers

The Best Lawyers in Canada™ is entering its 17th edition for 2023. We highlight the elite lawyers awarded this year.

Red map of Canada with white lines and dots

Wage and Overtime Laws for Truck Drivers

by Greg Mansell

For truck drivers nationwide, underpayment and overtime violations are just the beginning of a long list of problems. Below we explore the wages you are entitled to but may not be receiving.

Truck Driver Wage and Overtime Laws in the US

What the Courts Say About Recording in the Classroom

by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

Thirteen Years of Excellence

by Best Lawyers

For the 13th consecutive year, “Best Law Firms” has awarded the most elite and talented law firms across the country through a thorough and trusted data review process.

Red, white and blue pipes and writing on black background

The Upcycle Conundrum

by Karen Kreider Gaunt

Laudable or litigious? What you need to know about potential copyright and trademark infringement when repurposing products.

Repurposed Products and Copyright Infringemen

Choosing a Title Company: What a Seller Should Expect

by Roy D. Oppenheim

When it comes to choosing a title company, how much power exactly does a seller have?

Choosing the Title Company As Seller

Caffeine Overload and DUI Tests

by Daniel Taylor

While it might come as a surprise, the over-consumption of caffeine could trigger a false positive on a breathalyzer test.

Can Caffeine Cause You to Fail DUI Test?

Announcing The Best Lawyers in Australia™ 2023

by Best Lawyers

The results include an elite field of top lawyers and firms from Australia.

The Best Lawyers in Australia™ 2023

Announcing the 2022 Best Lawyers® in the United States

by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

Announcing The Best Lawyers in Germany™ 2023

by Best Lawyers

The results include an elite field of top lawyers and firms from Germany.

Black, red and yellow stripes