Consultation on Sustainable Corporate Governance Initiative is Completed

On 25 October 2020, the European Commission launched, as a part of the EU Action Plan, a public consultation on a possible EU-level regulatory initiative dedicated to foster long-term sustainable and responsible corporate behavior as part of the Commission’s strategy to achieve carbon neutrality under the European Green Deal. The European Commission’s consultation focuses on two key areas 1) corporate governance and 2) due diligence processes for social responsibility in relation to companies’ supply chains.

Prior to the hearing, the Commission has carried out two studies. In terms of corporate governance, the studies believe to have identified contradictions between the interests of shareholders and companies’ long-term strategy, and that the shareholders’ interests are primarily short-term economic interests focusing on profit maximization. In terms of due diligence, the Commission has concluded, based on the studies, that statutory initiatives are needed to act in accordance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.

What’s next: The responses to the consultation will supplement the findings from the two studies and help shape the Commission’s legislative proposals, which we expect to see during the second quarter of 2021. Follow the development here on Mazanti Pulse.

Tags:  Sustainability