In his political guidelines for the new EU Commission, President Juncker pledged to create a European Capital Markets Union (CMU) to increase non-bank financing of the European economy and further integrate capital markets. In this context, the EU Commission launched a public consultation in February 2015.
Frank Bold submitted a response to the consultation and prepared an accompanying paper outlining the recommendations sent to the EU Commission on the guiding principles of a proper functioning CMU.
Frank Bold has stated that financing through capital markets is not appropriate for most private companies, especially SMEs, which will continue to be primarily financed through relationship-based bank lending. Private companies are often rightly concerned about listing due to the risk of pressure from capital markets. Therefore, Frank Bold recommends clarifications to the role of investors in corporate governance and the protection of corporate purpose.
More broadly, future policy should integrate sustainability and corporate responsibility into its central priorities. We highlight necessary changes to insolvency, company and tax laws for the development of a strong, stable and equitable pan-European financial market.
Our response includes the following recommendations:
The next phase will be this summer when the EU's financial services commissioner, Jonathan Hill, will adopt an Action Plan establishing the roadmap to put in place the building blocks for CMU by 2019.
If you are interested to know more about Frank Bold's recommendations to promote sustainable financing of European companies you can read the accompanying paper to the CMU public consultation Written by Paige Morrow, head of Frank Bold Brussels Operations and responsible for the Purpose of the Corporation Project.
The experience with the implementation of the Non-Financial Reporting Directive (NFRD) and the analysis of the current status of companies’ sustainability reporting indicates that without clearer legal requirements, no guidance, no matter how good, will have substantial effect on the quality of companies reporting.
Over 20 leading NGOs working on corporate transparency have published a statement calling on EU policy-makers to define companies’ disclosure obligations on sustainability issues on the occasion of tomorrow’s high-level conference on the future of corporate reporting hosted by the European Commission in Brussels.
Under the Alliance for Corporate Transparency project Frank Bold and its partners have analysed how European companies disclose information necessary for understanding their impact on society and the environment, as required by the EU Non-financial Reporting Directive*.
