ELI Guidance on Company Capital and Financial Accounting for Corporate Sustainability: Report of the European Law Institute

Biondi Yuri (), Haslam Colin () and Malberti Corrado ()
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Biondi Yuri: CNRS, University Paris Dauphine PSL (IRISSO), Place Marechal Lattre Tassigny, 75016 Paris, France
Haslam Colin: Department of Business and Management, Queen Mary University of London, Mile End Road, E1 4NS London, UK
Malberti Corrado: University of Trento, Trento, Italy

Accounting, Economics, and Law: A Convivium, 2025, vol. 15, issue s1, s21-s88

Abstract: The European Law Institute – ELI Guidance proposes a set of Recommendations on company capital and financial accounting for corporate sustainability aimed at: (i) providing a frame of reference and analysis to understand corporate sustainability in the context of business and law; (ii) pointing to specific issues which need to be addressed by European and national lawmakers and regulators; and (iii) establishing a set of company law instruments which set out possible solutions to cope with these issues. The Recommendations aim at restating and modernising well-established principles of European company law on: (i) distributions; (ii) equity capital maintenance; and (iii) non-distributable reserves. Specific attention was paid to the enhanced controlling of new kinds of distributions such as share buybacks, as well as to limiting distributions of non-realised gains. The Project Team developed a comprehensive set of Recommendations aimed at fostering and facilitating sustainable business conduct through responsible company capital management and financial accounting adjustments. Further Recommendations were provided on related policy and regulatory matters concerning the EU framework for corporate sustainability. As a whole, the Recommendations propose that companies commit to a prudent use of resources, by setting aside sufficient reserves to meet social and environmental commitments over long-term horizons, and establish a fair balance between these commitments and distributions to shareholding investors. Corporate sustainability may be enhanced by implementing controls over distributions while reinforcing reserve provisioning. This in turn will ensure company continuity and resilience, as well as financial stability and sustainable development for the benefit of business and society at large.

Keywords: company law; financial accounting; corporate sustainability; corporate social responsibility; responsible corporate governance (search for similar items in EconPapers)
JEL-codes: G38 K22 M14 M41 Q56 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/ael-2024-0024

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Accounting, Economics, and Law: A Convivium is currently edited by Reuven S. Avi-Yonah, Yuri Biondi and Shyam Sunder

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