The European Commission is seeking views on the impact of bold measures such as granting stakeholders the right to sue directors who fail to consider climate risks or fail to properly implement a company’s sustainability strategy.
The Commission defines ‘stakeholder' as “a person or group not owning shares in an enterprise but affected by or having an interest in its operations, such as the employees, customers, local communities, NGOs, etc”.
A survey commissioned by the EC’s Directorate-General for Justice and Consumers (DG Just) seeks to find out the main factors behind short-term shareholder value maximisation and a potential reform of corporate law and board duties conducive to enhanced “accountability for sustainable value creation.”
The survey implements one of the Sustainable Finance Action Plan's items, action #10, labelled “fostering sustainable corporate governance and attenuating short-termism in capital markets”.
It goes to the core of stakeholder value-led corporate governance, seeking input on suggested obligations such as balancing the interests of shareholders and stakeholders, and allowing a shareholder representing at least 2% of shares “to launch a proceeding to enforce this requirement” if needed.
The survey also seeks views on an obligation for the board to set “sustainability targets aligned with the Paris Agreement, the EU's climate mitigation and adaptation objectives and other SDGs”.
Other suggested obligations include competence in sustainability matters when nominating the board and sustainability performance linked to director’s remuneration.
It also seeks feedback on an obligation for companies to define as corporate purpose the creation of “general public benefit” which should be incorporated into “a specific charter issued by a public office”.
One of the 78 questions of the survey asked: “Do you agree with the statement that companies operating in Member States which adopt the stakeholder model to corporate governance perform more sustainably?”– defining that model as one whereby companies are run not only in the interest of the shareholders but other constituency groups.
The survey’s deadline is November 27 and it is open for constituents in the following member states only: Belgium, Finland, France, Germany, Hungary, Italy, Netherlands, Poland, Portugal, Slovenia, Spain and Sweden.