Shareholder primacy is a corporate governance model under which a company must first and foremost serve the interests of its shareholders. Under this model, which dates back to the 1970 article 'The Social Responsibility of Business is to Increase its Profits' by Milton Friedman, societal and environmental concerns come second to profits.

Recently, the sustainable finance model has started to challenge the notion of shareholder primacy. In addition, companies with strong ESG ratings are performing above their peers and climate risk is increasingly considered a material business risk, with bottom-line impacts. As a result, an increasing number of investors trying to identify sustainable investment opportunities are demanding climate-related financial disclosure when making their investment decisions.

 Task Force on Climate-related Financial Disclosures (TCFD) was established with the goal of developing a set of voluntary climate-related financial risk disclosures. Its recommendations are designed to promote forward-looking investments.


Clyde & Co is running a virtual legal hackathon between 1 July and 4 August 2020 in partnership with The Chancery Lane Project. This post is part of a series of updates posted during the hackathon on business-relevant climate initiatives and innovative solutions to some of the challenges arising from climate change.