207 General responsibility towards evidence-based purpose.

The legal responsibilities of the board offer various opportunities for including social and ecological interests in corporate governance. In order to overcome the identified issues linked to such inclusion, I argue that particularly the ecosystem perspective has valuable insights to offer for defining durable success and guiding the weighing of social and ecological interests. In relation to the general responsibility of the board, I recommend that durable success should be defined as an evidence-based public purpose, conditioned by both the need for profitable value creation as well as the specific needs and limits of its environment. While the partnership perspective mainly defines corporate success by reference to profitable value creation, the institutional perspective suggests the need for a public purpose capable of aligning the success of the corporation with the public interests by which it is constituted. By emphasizing the factual embeddedness of the corporation in its environment, the ecosystem perspective adds to this that a corporate purpose should be based on the factual circumstances in which the corporate enterprise operates. Such an evidence-based approach to corporate success allows for the needs and limits of the larger environment in which the enterprise is embedded to be included in the general responsibility of the board. Simply put, the long-term durable success of the corporation is only possible if the larger environment remains capable of providing the ecosystem services on which the corporate enterprise (and others) depends. By thus including the needs and limits of the social and ecological environment in the definition of durable success, the general responsibility of the board can be aligned with the larger dynamic of its environment.

Such an inclusion of environmental needs in the definition of success impacts the range of interests involved in the consideration and the weighing of interests expected from the board. As a result, the board becomes responsible for assessing the gravity of larger public interests in relation to the more private stakeholder interests involved in the corporation. Due to corporate boards’ lack of democratic legitimacy for this consideration of public interests, explicit ethical standards are needed to guide boards in their weighing of such interests. In my assessment, the perspectives share the consensus that corporations should prevent disproportionate harm to their environment. The institutional perspective draws upon the general principle of fairness for preventing environmental harm, thereby requiring boards to deal with external interests in a reasonable and fair manner. The ecosystem perspective importantly adds to this that the environmental embeddedness of corporations requires their activities to preserve the integrity and resilience of their environment. Most social and ecological problems are considered to result from a disharmonious relationship between corporate activities and the integrity of the larger social and ecological ecosystems in which these corporations operate.

Boards should therefore take into consideration whether their decisions preserve the integrity and resilient capacity of their environment to maintain itself in the face of continuous change. At the very least a board decision should not cause disproportionate harm to the resilience of its environment. In order for a more harmonious integration of corporate activities in their environment, the ecosystem perspective draws upon best practices from the field of virtue ethics exhibiting aspirational behaviour which deals with environmental concerns in the most excellent way. Such virtuous best practices may provide guidance for boards to consider specific social and ecological interests in relation to the unique circumstances in which their enterprise operates. In sum, I recommend requiring boards to weigh social and ecological interests in accordance with a general principle of fairness, without objectionable harm to the resilience of their environment and guided by specific best practices of virtuous behaviour.