European Institutions Developments – Trilogue Update on CS3D – EP: COP28: MEPs want to end all subsidies for fossil suel globally – EP: At COP28, Europe must grapple with consequences of carbon tariff (Euractiv) – ESMA: Publications on Sustainable Finance
International Developments – IASB: Consultation on improved accounting requirements – BIS: Global watchdog proposes detailed climate disclosures from banks (Reuters)
European Developments – Summary of the EFRAG Conference, 28 November 2023 – EuropeanIssuers’ Position Paper on ESMA & EBA’s Report on the Implementation of SRD2
National Developments – US securities regulator signals it may curb climate rule ambitions (Reuters)
Publication/Article – Climate change: Boards of directors fall far short of expectations – ICGN Viewpoints: Reflecting climate-related matters in financial statements – Family involvement in ownership and governance and internal audir quality – Spillover effects of CS3D in Brazil, Chile, Kenia and Uganda
ecoDa News
1st of December: ecoDa European Board Diploma module Dialogue between boards and stakeholders – with ICGN
7th of December: Kick-off meeting: Sharing group on publications
8th of December: ecoDa European Board Diploma module ESG matters – with Chapter Zero Brussels
SAVE THE DATE: EU CG Conference under the Belgian presidency scheduled on March 21 !!
– ecoDa represented in the OECD Consultation session with stakeholders and advisory bodies on the review of the OECD Guidelines on Corporate Governance of SOEs – Norway: Vote on the proposed legislation to even the gender balance on boards of private companies – Does every company need a climate transition plan? – Switzerland: Switzerland to Introduce Labelling and Disclosure Rules for Sustainable Investment Products
European Developments
– ecoDa’s comments on the ordinary legislative procedure on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities – EFRAG ESRS Q&A Platform
National Developments
– UK: IoD launches Commission to develop a code of conduct for directors
ecoDa’s News
EU INSTITUTIONS DEVELOPMENTS EP: Multiple vote-share structures
INTERNATIONAL DEVELOPMENTS – ecoDa represented in the OECD Consultation session with stakeholders and advisory bodies on the review of the OECD Guidelines on Corporate Governance of SOEs – Norway: Vote on the proposed legislation to even the gender balance on boards of private companies – Does every company need a climate transition plan? – Switzerland: Switzerland to Introduce Labelling and Disclosure Rules for Sustainable Investment Products
EUROPEAN DEVELOPMENTS – ecoDa’s comments on the ordinary legislative procedure on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities – EFRAG ESRS Q&A Platform
NATIONAL DEVELOPMENTS – UK: IoD launches Commission to develop a code of conduct for directors
ecoDa News
AccountancyEurope, ecoDa and ECIIA publication on “ESG Governance: questions boards should ask to lead the sustainability transition” – to be launched on 7th of November
Successful initial days of our European Board Diploma happened on 25th and 26th of October – see more details on ecoDa’s LinkedIn profile!
EU INSTITUTIONS DEVELOPMENTS EC: The EC adopted the first set on the European Sustainability Reporting Standards EC: Streaming available: The Sustainable Finance Disclosure Regulation – what next? EP: European Parliament adopts European Green Bond Standard EP: Commissioner McGuinness: announcement that sectoral sustainability reporting standards will be postponed EP: Financial sector and corporate sustainability due diligence, in or out? (Euractiv) ESMA: Analysis of the existence of an ESG pricing effect (‘the Greenium’) across different types of sustainable-labelled debt instruments
EUROPEAN DEVELOPMENTS
EFRAG has launched a call for tender to assist EFRAG in developing cost benifit analysis EuropeanIssuers‘ position on the proposed EU Regulation on the transparency and integrity of ESG rating activities
1. Webinar by ecoDa and Allen & Overy: The Corporate Sustainability Due Diligence Directive: the possible impacts on Directors’ Duties On Friday, 27 October 2023, starting at 14.00 pm CET, ecoDa holds a joint seminar on the Corporate Sustainability Due Diligence Directive (CS3D) together with Allen & Overy. Our speakers Gauthier Van Thuyne, Bart De Bock and Pascal Durand-Barthez will question the consequences of the draft directive in terms of directors’ responsibilities and liabilities. The webinar will also give an overview of the different director liability regimes currently in force in the European Union following our new joint survey. Registrations are now open! Register here!
2. ecoDa’s Report and Recommendations on Independent Directors ecoDa publishes its paper “Report and Recommendations on Independent Directors”. The role of independent non-executives is particularly important in Corporate Governance. It is key to ensuring proper management of conflicts of interest and that the interests of all relevant stakeholders are adequately taken into account. As a result, particular attention must be paid to the definition of this notion, to the criteria determining this status, to the evaluation of this qualification over time, and to the correct use of terms distinguishing NEDs from iNEDs. The report summarises definitions and requirements across Europe. It gives some recommendations. For instance, the Corporate Governance Codes should recommend that board evaluations take into account more systematically how conflicts of interest are managed. They should include requirements regarding individual director evaluations as well as at least annual re-evaluations of independence. Read the full paper on the ecoDa website via this link.
3. ecoDa and PwC recording is available: Public Country-by-Country Reporting ecoDa and PwC organised a video on Public Country by Country Reporting. Anne-Hélène Monsellato, independent board member and chair of ecoDa’s Working Group on Audit Committees leads the conversation between the two experts Edwin Visser, Partner and deputy global tax policy leader at PwC, and Keetie van der Torren, Tax director at PwC. This video explains the requirements in detail, relates accounting and reporting requirements to the tax dimension, discusses reporting burdens, and highlights some practical recommendations for board members. Watch the full video on the ecoDa YouTube Channel, and share the knowledge. To the recording
INTERNATIONAL DEVELOPMENTS US: ESG ratings in the S&P 500 US: The Well’s Fargo case (Reuters)
EUROPEAN DEVELOPMENTS EU due diligence report raises hope for activists but worries foreign companies (Euractiv) European shareholders contest more executive pay reports (Reuters)
NATIONAL DEVELOPMENTS UK: IoD report: Boards of directors must take back control of their organisations!
11th of September: ecoDa response to the OECD public consultation of the Guidelines on SOEs and publication of press release
13th of September: ecoDa Education Committee meeting in Milan
15th of September: ecoDa Advocacy Committee meeting
20th of September:: BIAC, ecoDa, IFAC webinar on “Revised OECD/G20 Corporate Governance Principles- What can companies do to promote sustainability and investor confidence?” that will be held virtually from 3:00pm-4:30pm CEST. More than 900 registrations so far ! Register here
1. ecoDa’s response to the IIA consultation on global internal audit standards
In its response to the Institute of Internal Auditors’ consultation, ecoDa highlighted some key points:
The standards should be made simpler, principle-based, and more concise;
They are not ambitious enough in view of ESG and technology challenges;
The specificities of internal audit are not exploited towards:
a hard look at efficiencies;
greater leverage of the inside knowledge of the sector;
greater cooperation with teams and added value to the organisation to foster a better culture;
The board responsibility is to set the right policies, it is not a compliance activity that goes into any detail;
There should be more emphasis on continuous training.
2. ecoDa advocates the possibility for each Member State to regulate multiple vote share structures
As the European Commission has adopted a draft directive on multiple-vote share structures in companies which is also being examined by the European Parliament, ecoDa has decided to take a general position on the subject before going into the details of the draft text. ecoDa is of the opinion that structures with loyalty shares and multiple voting rights can promote long-term perspectives. However, it should be supported by strong minority protection, if and when allowed by national law. The subject is currently exacerbated and different very marked opinions are being expressed. As a general principle, the risk that a shareholder majority misuses its power for its own benefit at the expense of minority shareholders must be effectively curbed through a well-developed system of minority protection.
The related press release is available here, and ecoDa’s full position paper, here.
3. ecoDa’s Workshop on the G dimension of ESG
As part of its Corporate Governance Dialogue, a group of experts reflecting on new trends in corporate governance, ecoDa, will organise, on June 23rd, a workshop (on invitation only) in Brussels to discuss the G dimension of ESG. More particularly, the experts will be invited to tackle two topics. First, is the G fit for purpose in the acronym, and second, how to address the G component. ecoDa will benefit from a wide range of perspectives, from standard-setters (with EFRAG), shareholder advisory firms, proxy advisors, academics, to board members.
1. The new Chair of ecoDa, Rytis Ambrazevičius, annouces his objectives
Rytis Ambrazevičius, president of the Baltic Institute of Corporate Governance, has been elected as chair of the ecoDa Board of Directors. Being an experienced board director and chair in several major Baltic companies, Rytis Ambrazevičius announced the objectives of his mandate. If the Corporate Sustainability Due Diligence Directive is a high priority for ecoDa, the issue of how directors’ liability is dealt with in different member states is as much important. In addition, ecoDa is carrying out a survey on the remuneration of non-executive directors and a study of how the notion of independence of directors has evolved.
2. Joint statement from the business community on the Corporate Sustainability Due Diligence Proposal
ecoDa, together with 35 other business organizations (including BusinessEurope, EuropeanIssuers, SMEUnited…), has issued a joint statement gathering key recommendations and concerns to be taken into account for the next stages of the legislative process. In this letter, we call for:
full harmonisation to ensure a level playing field and avoid further internal market fragmentation;
legal liability provisions to be balanced. Companies cannot be made liable for damages they have not -intentionally or negligently – caused.
legal clarity.
the deletion of directors’ duties of this due diligence framework.
3. ecoDa’s Advocacy Video on the Corporate Sustainability Due Diligence
With this video, ecoDa wants to show its support for the adoption of the Corporate Sustainability Due Diligence Directive, while warning EU regulators about possible pitfalls that would make its application difficult:
General and vague notions, because they will give rise to different approaches, risk opening the way to protracted litigation;
Regulating directors’ duties should not be done as part of this specific directive and without a thorough impact review to assess whether the adoption of a uniform prescription in this matter of civil law is necessary.
4. The 2023 Fall Edition of the European Board Diploma is now open to registrations
The fall edition of ecoDa’s European Board Diploma will happen on the 25th, 26th of October and 16th of November for the core basis, the 21st of November for the module on audit committees, the 1st of December for the module on the relationship between shareholders and the board (done in partnership with ICGN), and the 8th of December for the module on climate issues (done in partnership with Chapter Zero).
If you are looking for updating your skills on the latest corporate governance-related developments, register, seats are limited!
On the 24th of May, ecoDa organized its Members Forum, a unique opportunity for the institutes of directors to learn from each other and exchange best practices. The day ended with a guided tour of the Solvay House in Brussels.
EUROPEAN DEVELOPMENTSEFRAG: Update on non-financial reporting EFRAG prioritised the following deliverables for the implementation of the European Sustainability Reporting Standards: Materiality assessment guidance; Guidance on the value chain including a map of the extent of value chain information required by the different disclosures andA list of the detailed requirements in Set 1, to be provided in Excel to support the gap analysis activities that the preparers are now undertaking.The EFRAG SRB tentatively plans to issue the deliverables in the Summer 2023.
INTERNATIONAL DEVELOPMENTSUS: Investors balk at S&P dual-class shares decision (BoardAgenda) The ongoing row over dual-class shares has reignited in the US after a decision to welcome companies with differential share structures back into S&P Global Indices. S&P revealed its decision in April but it has emerged that representatives of US pension funds have pushed back, expressing dissatisfaction over the decision and how it was made. The Council of Institutional Investors (CII) and the International Corporate Governance Network remain opposed to dual-class shares that do not come accompanied by a sunset clause. Florida: Passes anti-ESG bill (Minerva Analytics) Florida has become the latest Republican state to prohibit the inclusion of ESG considerations in investment decisions, following similar legislation passed in Kansas. The anti-ESG bill requires the Florida State Board of Administration to make investment decisions based ‘solely on pecuniary factors’. The legislation obligates state-registered banks to make loans to several anti-ESG industries, such as fossil fuels or manufacturing and selling firearms. The bill also outlaws the issuance of green bonds by the government. UN: Binding instrument to regulate activities of corporations The open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights was mandated to elaborate an international legally binding instrument to regulate the activities of transnational corporations and other business enterprises with respect to human rights. The working group’s session was a recognition that clearer legal requirements were needed, including improving government accountability for ensuring that human rights were respected by business enterprises. Between April and June 2023 consultations will be run on the draft instrument.
NATIONAL DEVELOPMENTSFrance: Due diligence: lawyers are asking for cooperation and dialogue (L’Agefi) Alice Dunoyer de Segonzac and Geoffroy Pascaud, lawyers at Clifford Chance, deliver their analysis of the French due diligence law. According to the lawyers:Criticisms of the content of due diligence plans come under substantive procedures, which need more in-depth discussions, that do not correspond to the climatic or social emergency denounced by the NGOs;The content of due diligence plans are not specified by any standards, no reference system, and no independent body;In the absence of standards, the content of the plans should be defined through collaboration and dialogue with stakeholders. UK: Watchdog plans to share up stock listing rules (BBC) The Financial Conduct Authority has announced plans to shake up its rules in a bid to attract more companies to list shares on UK stock markets. But there are concerns the changes could erode shareholders’ rights. The FCA said it wanted to make the rules companies must follow to be allowed to list their shares in the UK, “more effective, easier to understand, and more competitive”. The proposals include:replacing two listing categories with one single one;removing the requirement for shareholders to have a vote on transactions such as acquisitions;eligibility criteria that can deter start-ups and newer companies are removed. France: Total sues Greenpeace over emissions report (Reuters) Total has sued Greenpeace France and climate consulting Factor-X over a report claiming the company massively underestimated its 2019 greenhouse gas emissions. The civil complaint seeks a ruling that the publication contains ‘false and misleading information’, a judicial order to withdraw the publication and cease all references to it under penalty of 2000 euros in fines per day. France: Initiative for a new regenerative economic model for companies The ‘Grand Défis’ is a French initiative launched to enact 100 proposals to accelerate the green transition. Among their recommendations:Create a stakeholder committee dedicated to the social and sustainable strategy;Appointment of an independent board member expert on environmental issues;Mandatory training of board members;Reinforce sanctions against greenwashing.France: Getlink created a new indicator to link financial and carbon emissions Getlink, a French company operating Truck and Passenger Shuttle services, has published its new “Decarbonisation Margin” indicator which measures the Group’s capacity to adapt to the increasing cost of greenhouse gas emissions under government policies targeting reduction in global warming. The Decarbonisation Margin is calculated by removing future carbon costs in Scopes 1,2 and 3 from the Group’s consolidated EBITDA and demonstrates its climate resilience. UK: LSE Chief calls for higher UK executive pay to retain listings (Financial Times) The Head of the London Stock Exchange said that UK executives should be paid more if the country wants to retain talent and deter companies from moving overseas. Her comments come as shareholders at some of the largest UK companies mount rebellions against executive pay plans. The London Stock Exchange is looking to bring together the chairs of listed companies, founders of private companies, asset managers, the Financial Reporting Council, the Investment Association, and proxy agencies for talks.
PUBLICATIONS/REPORTS2023 Board Monitor UK (Heidrick & Struggles) The 2023 Board Monitor UK report tracks and analyzes trends in non-executive director appointments to the boards of the largest publicly listed companies in the United Kingdom (FTSE 350). Among the main findings:Executive board appointments fell 23% last year, to 342;First-time directors fell from 36% to 28%;57 years old is the average age of board members;A record share of seats went to women in 2022: 58%;A record number of active executives appointed in 2022, 49% compared to 40%.
ecoDa NewsThe summary report of the joint ecoDa/EY webinar on ‘Linking executive pay to sustainability goals: practical considerations’ is now available, as well as the recording;8th of May: ecoDa to join ECIIA and Accountancy Europe to discuss corporate governance developments and how to help boards navigate the ESG matters;10th of May: ecoDa’s European Board Diploma, Ceremony;11th of May: ecoDa’s Education Committee meeting;12th of May:ecoDa’s Advocacy Committee meeting;ecoDa’s Corporate Governance Dialogue Advisory Committee meeting.
