ecoDa – EU Alert 36

US: ESG ratings in the S&P 500
US: The Well’s Fargo case (Reuters)

EU due diligence report raises hope for activists but worries foreign companies (Euractiv)
European shareholders contest more executive pay reports (Reuters)

UK: IoD report: Boards of directors must take back control of their organisations! 

EY Global risks survey
2023 Edelman Trust Barometer Global Report
The audit committee and dividend policy: an empirical study of the post-SOX era
Mc Kinsey – Four essential questions for boards to ask about generative AI

ecoDa News

  • 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

The EU Alert is available for download here.

Newsletter ecoDa June 2023

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.

Newsletter ecoDa may 2023

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.

Read the related press release.

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!


5. ecoDa’s Members Forum

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.

ecoDa EU Alert 18

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.

ecoDa EU Alerts 9

EC: SFRD review
Legislators strike deal on a new standard to fight greenwashing in the bond markets

US Justice Department wants executives to foot bill for corporate misconduct (Reuters)

‘Easy’ carbon targets keep exeuctive pay high (Board Agenda)

Germany: Why the CSDDD needs a safe harbour framework
France: Total’s Tilenga and EACOP Projects: the Paris Civil Court dodges the issue (Business & Human Rights Resource Centre)

Global dividend index (Janus Henderson)
AIG: US cybersecurity – old practices, new visions

ecoDa News
9th and 10th of March: ecoDa’s Spring Edition of its European Board Diploma with 42 participants.

The EU Alert is available for download here.

A series of webinars launched by ecoDa and Mazars on the CSRD

As the Corporate Sustainability Reporting Directive (CSRD) came into force on January 2023, ecoDa and Mazars, are launching a series of two webinars to enlighten board members about the new requirements and responsibilities implied by this new directive. To equip board members, but more broadly, all actors that will now play a role in sustainability reporting, with the right understanding and practical tips to apply the new rules, ecoDa and Mazars have gathered knowledgeable practitioners. They will share their complementary expertise on the rules, the practice, and what could be expected in terms of supervision – and the best way to get prepared.

Per registrarti all’appuntamento del 17 Aprile CLICCA QUI

Per registrarti all’appuntamento del 18 Aprile CLICCA QUI

Webinar ecoDa and EY – Linking executive pay with sustainability goals: pratical considerations

On the 30th of March (from 11.00 to 12.00 pm CEST), ecoDa, together with EY will organise a webinar to discuss how companies can start developing sustainable compensation schemes. At a time when companies’ directors enjoying variable remuneration are increasingly incentivised to contribute to combating climate change by reference to the corporate plan, defining material ESG targets over a timeframe remains a challenge. Our high-level practitioners and experts will therefore guide companies through the main questions they should reflect upon to ensure sound and relevant sustainable compensation frameworks.

Per registrarti CLICCA QUI

ecoDa EU Alerts 7

EP: Approval of the new rules to revive European long-term investment funds

SEC open to easing controversial climate disclosure proposal (Politico)
Audit Committees name ESG reporting at the top agenda item (BoardAgenda)
Statement on US-EU Financial Regulatory Forum (US Department of the treasury)

NGOs accuse EU’s lending arm of due diligence failings (Financial Times)
EFRAG: Where is corporate reporting heading (Summary Report)
Multi-stakeholder analysis of corporate failures (Accountancy Europe)

UK: The country’s financial watchdog hit with claim over prospectus climate risk disclosure (Financial Times)
France: More than 1000 entreprises à mission (Novethic)

Effective downstream human rights due diligence: Key questions for companies (GBI)

ecoDa News

  • ecoDa’s team is enlarging with an intern, Jonas Van Diepen;
  • Several preparatory meetings for the Spring Edition of ecoDa’s European Board Diploma.

The EU Alert is available for download here.

ecoDa EU Alert 6

EP: CS3D Update

World’s biggest investment fund warns directors to tackle climate crisis or face sack (The Guardian)

Companies and investors calling for ambitious European sustainability reporting standards
An analysis of the EU governance framework for corporate reporting (The European Contact Group)
European discussion on the implementation of the CSRD

France: The French High Council of Statutory Auditors could harden its position (Les Echos)
UK: Shell directors personally sued over ‘flawed’ climate strategy (Business & Human Rights Resource Centre)

OECD Forum on due diligence and responsible business conduct

The EU Alert is available for download here.

ESG embedding: are you ready? A call for Boards, Risk Managers and Internal Auditors

Corporate Sustainability: Risk Managers and Internal Auditors must work closer with Boards of Directors
Boards of Directors need to work closer with Risk Managers and Internal Auditors to meet the sustainability challenges facing corporations. Otherwise, there is an increased risk of not meeting legal obligations and market expectations.
“Risk Managers and Internal Auditors are needed for their expertise when it comes to anticipating the effect of double materiality. The two professions can also help the Board in the dialogue with relevant stakeholders. Companies should first assess their level of maturity in terms of overall approach to sustainability”, highlighted Béatrice Richez-Baum, Director General, ecoDa.
EFRAG has just delivered the first set of draft standards for European sustainability reporting (ESRS) to the European Commission. The standards underline the urgency for European corporations to meet the sustainability challenge. At board level, more in-depth knowledge of sustainability issues in business operations becomes imperative.
“As a prerequisite, risk management and internal audit must support the Board and senior management so that strategy, risk management, policies, governance and culture fulfill the requirements and expectations. In turn, the Board and the C-Suite must give internal audit and risk management the means to do this”, added Pascale Vandenbussche, Secretary General, ECIIA.
While new developments regarding enhanced European legislation on corporate sustainability (including EFRAG’s ESRS standards) are emerging, ecoDa representing board members, FERMA representing risk managers and ECIIA for internal auditors describe in a joint paper, why cooperation between the three roles is needed.
“A corporate culture that embraces enterprise-wide risk management is a fundamental factor in determining how organisations approach and deal with sustainability. Managing sustainability requires a mature risk management function and processes. And, with our maturity matrix in the paper we guide organisations to gain a better sense of their sustainability journey”, Typhaine Beaupérin, FERMA CEO.
Embedding sustainability into business operations requires Boards of Directors, Risk Managers and Internal Auditors to cooperate. A clear understanding between the Risk Management and Internal Audit functions must be developed to support the Board, and deliver on sustainability objectives.