Two Paths, One Goal: Comparing the tools reshaping corporate accountability

A/Prof Ingrid Landau, 2026

Opening

Integrating sustainability into corporate governance frameworks is an essential step in the transition to a sustainable, low-carbon economy. Corporate governance structures determine where capital flows, how risks are assessed and who is held accountable. Embedding sustainability into board oversight, executive incentives and reporting requirements can play a critical role in shifting what often tend to be aspirational social and environmental commitments into actionable ones – helping companies manage transition risks, attract climate-conscious investment, and drive the coordinated, economy-wide changes needed to decarbonise supply chains and operations at scale. Recognising that voluntary measures are insufficient on their own to secure change at scale, governments around the world are adopting a mix of regulatory, incentive-based and institutional measures to promote sustainable corporate governance – though the extent to which, and how, national lawmakers should intervene remains subject to debate.

The comparison

This project examined and compared two distinct but related regulatory approaches aimed at reorienting corporate decision-making towards more socially and environmentally responsible behaviour: sustainable finance reforms, which seek to manage sustainability-related financial risks to business and align private capital flows to address global sustainability challenges such as climate change, biodiversity loss and social inequity; and mandatory human rights and environmental due diligence (‘mHREDD’), which requires large companies to identify, prevent, mitigate and remediate adverse impacts on people and the environment arising from their own activities, those of their subsidiaries, and their supply chains. Although both approaches are directed at integrating sustainability into corporate governance, they have tended to run on parallel tracks – discussed in different areas of policy and practice, and in different bodies of academic literature. While the European Union has adopted both approaches, the Australian Government has to date chosen to focus on developing a sustainable finance agenda.

Findings

Ingrid Landau compared the two approaches through an accountability lens to contribute new perspectives to law, policymaking and scholarship on corporate sustainability governance. Exploring the accountability logics underpinning each approach revealed differences, convergences and potential complementarities between the two interventions, as well as variations in their design and implementation. Drawing on early experiences in Europe, the project also offered insights to inform the nature and trajectory of Australia's nascent corporate sustainability agenda.

Outcome and impact

The research formed the basis of a submission to the Commonwealth Treasury on the Australian Government's Sustainable Finance Strategy, and an open-access article in one of Australia's leading generalist law journals, which has since been cited within Australia and internationally.