Leading NGOs working on corporate sustainability and sustainable finance have published a briefing with key recommendations to help clarify directors’ responsibilities to oversee sustainability that fully fit with existing company law and corporate governance frameworks across Europe.
The briefing follows a public letter sent by NGOs to DG Justice Commissioner Didier Reynders and Executive Vice-President Frans Timmermans in support of the EU Commission plans on Sustainable Corporate Governance (SCG) and responding to recent criticism.
The SCG initiative, which was included in the Sustainable Finance Action Plan and the EU Green Deal, is set to provide solutions to two issues:
The NGOs are presenting detailed recommendations for the latter part of the initiative. The involvement of boards is paramount to ensure that companies are able to consider and take the necessary strategic decisions with regards to the management of sustainability risks and impacts, and integrate them in overall corporate strategies and business operations.
More specifically, our recommendations tackle the need for coherence and alignment within the corporate and financial market regulatory framework in Europe. In this regard, connecting the dots between companies’ sustainability reporting and upcoming due diligence obligations requires effective governance and oversight from the company’s senior management and the board. Our proposals are therefore divided into two categories to ensure an effective reform:
Filip Gregor, Head of Responsible Companies Section at Frank Bold, states: Board members already have wide discretion to take account of sustainability matters. However, as shown by the Alliance for Corporate Transparency research on 1000 large EU corporations’ non-financial (sustainability) reports, less than 15% of companies provide insights on the integration of sustainability in core business strategy, Board discussions, and performance incentives. The solution to this gap in practice is simple. To bring sustainability on the board's agenda, withing the existing directors' duties, the European Commission's sustainable corporate governance reform should specify board's procedural obligation to provide oversight of corporate sustainability risk management and due diligence obligations."
If you have any questions, please write to susanna.arus@frankbold.org
Social entrepreneurship has rapidly arisen as an attractive option for changemakers who embrace the idea of entrepreneurship for societal rather than primarily private benefit. They have adopted alternative business models including B-corporations, cooperatives, companies controlled by foundations, and the Belgian Social Purpose Company. Based on this premise, Frank Bold organised an event on the 18th of March to gather people who are committed to deep change to discuss the subject.
The Brussels office of the public interest law firm Frank Bold is currently recruiting an Events and Communications Intern to start in mid-March on a 3-5 day/week basis, for a period of three months, with the possibility of a three month extension.
Bucharest: The European Bank for Reconstruction and Development (EBRD) confirmed this week [1] that it has suspended plans to finance the refurbishment of the Turceni coal power plant in Romania [2]. The project is currently subject to a number of legal challenges on environmental grounds and Romanian authorities are investigating allegations of corruption at the plant.
