13 February 2021

EuropeanIssuers favours a recommendation and denies the need of an EU legislation for a Sustainable Corporate Governance Framework

In its position paper issued jointly with the answer to the European Commission’s Consultation on sustainable corporate governance, EuropeanIssuers reiterated openly its concern on the study which served as the basis for the consultation.  Whilst fully supporting the concept of sustainable corporate governance which helps reconcile economic growth, social progress and environmental protection, it said that the questionnaire led to predefined answers impeding participants to express dissenting opinions without being regarded as opponents of good governance.

Luc Vansteenkiste, Chairman of EuropeanIssuers said: “We regret the lack of consideration of the social reality of the business environment. Companies already integrate sustainable governance in their strategy in many ways through increased dialogue with stakeholders and discussing CSR risks and criteria in executive compensation at the board level. A company’s long-term vision embraces and considers its environment, customers and people otherwise it has no future. This evolution is at the core of the new set of principles of the Corporate Governance codes across the EU and applied by business leaders”.

Florence Bindelle, Secretary General of EuropeanIssuers added: “If the EU considers it necessary to take further action on the issue of corporate governance, this subject should be better dealt in the form of a Recommendation towards the Member States in order to avoid a “one size fits all” approach due to the wide diversity of corporations and practices.”

EuropeanIssuers highlighted that several aspects of directors’ duties were sufficiently covered by existing legal requirements of other EU legislative instruments and corporate governance codes. For example, when it comes to the management of the risks and opportunities in relation to stakeholders, not only is the current framework sufficient and efficient, but it will be further strengthened following the review of the non-financial reporting directive. As such, EuropeanIssuers recommended that overlapping of legislation should be avoided on the obligations of directors.

Furthermore, EuropeanIssuers considered that there is no need for a definition at EU level of the company interest, as the diversity of companies and sectors in which they operate is ill-suited to prescriptive and uniform rules that may hinder the development of good practices.

Moreover, in its response, EuropeanIssuers restated that while supporting an EU legal framework for supply chain due diligence, it needs to be constructed as an obligation of means, including only the most severe risks, and align with internationally recognised principles of responsible business conduct. An EU legislative framework on the human rights shall require companies to make best efforts to avoid violations of human rights. It mentioned that measures shall apply also to non-EU companies operating within the EU.

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For EuropeanIssuers’ response to the European Commission’s Consultation on sustainable corporate governance, please click here.

For EuropeanIssuers’ position on sustainable corporate governance, please click here.

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