The Intersection of Corporate Sustainability and Securitization Theory: A Comprehensive Analysis

The Intersection of Corporate Sustainability and Securitization Theory: A Comprehensive Analysis

Introduction:
In recent years, two significant topics have captured the attention of scholars and policymakers: corporate sustainability and securitization theory. While seemingly unrelated, these areas share common points that warrant exploration. This article aims to delve into the potential impact of the Corporate Sustainability Due Diligence Directive (CSDDD) on the remuneration of directors and the applicability of securitization theory within the framework of corporate sustainability. Additionally, we will highlight the need for a balanced approach that combines theoretical and empirical perspectives.

The Corporate Sustainability Due Diligence Directive:
The recent agreement on the Corporate Sustainability Due Diligence Directive by EU institutions has sparked discussions worldwide. The directive imposes due diligence obligations on large companies, both within and outside the EU, concerning their adverse impacts on human rights and the environment. Initially proposed by the Commission, the CSDDD applies to EU companies with over 500 employees and a worldwide turnover of more than EUR 150 million. Moreover, EU companies in high-risk sectors with more than 250 employees and a turnover of over EUR 40 million also fall under its scope.

However, it is noteworthy that the agreed-upon threshold for non-EU companies differs from the Commission's proposal. The threshold now stands at EUR 300 million, deviating from the original EUR 150 million threshold used for EU companies. This variation raises questions about the potential impact on non-EU companies and the need for more information regarding their involvement in high-risk sectors.

Expanding the Scope and Impact:
One of the notable decisions made during the agreement on the CSDDD is the expansion of the list of impacts on human rights and the environment. Annex I to the directive now includes a broader range of qualifying impacts. This expansion suggests that companies, including those in the financial sector, will be required to adopt a plan ensuring their business models align with limiting global warming to 1.5°C.

Securitization Theory and Framing:
Shifting our focus to securitization theory, it is crucial to examine its relationship with framing theory. Some scholars argue for the integration of securitization theory within framing theory due to its broader scope, coherence, and empirical support. This blending of theories can offer a more comprehensive understanding of how security issues are constructed and legitimized.

A Corpus-based Review:
A corpus-based review of twenty-five years of securitization theory research reveals interesting trends. Out of 171 papers analyzed, more than half were primarily theoretical, while only a minority focused on key issues through sustained engagement with empirical cases. The lack of methodological considerations is evident, with only three papers employing quantitative methods out of 82 papers with empirical content. This preference for theorization without adequate empirical grounding raises concerns about the robustness and applicability of securitization theory in real-world contexts.

Connecting the Dots:
Although corporate sustainability and securitization theory may seem disconnected, there are notable connections to be made. The CSDDD's focus on identifying, preventing, mitigating, and ending adverse impacts aligns with the core principles of securitization theory. Both emphasize the importance of taking appropriate measures to address systemic risks and protect human rights and the environment. By incorporating securitization theory into the implementation of the CSDDD, policymakers can enhance the effectiveness of corporate sustainability measures.

Actionable Advice:

1. Foster Collaboration: Encourage collaboration between scholars, policymakers, and industry experts to bridge the gap between theory and practice. This collaboration can lead to more robust and contextually relevant sustainability frameworks.

2. Enhance Methodological Rigor: Researchers should prioritize incorporating rigorous empirical methods into their studies on securitization theory. This approach will strengthen the theory's credibility and contribute to evidence-based policymaking.

3. Embrace Interdisciplinary Approaches: Recognize the interconnected nature of corporate sustainability and securitization theory by promoting interdisciplinary research. By merging insights from various disciplines, we can develop holistic solutions to address global challenges effectively.

Conclusion:
As the world grapples with complex environmental and societal issues, the intersection of corporate sustainability and securitization theory presents an opportunity for transformative change. The recently agreed-upon Corporate Sustainability Due Diligence Directive sets the stage for companies to align their practices with global sustainability goals. By incorporating securitization theory within this framework, policymakers can enhance the understanding of systemic risks and promote actionable solutions. Through collaboration, methodological rigor, and interdisciplinary approaches, we can pave the way for a sustainable and secure future.