| 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. |
The EU Alert is available for download here.