Response to the Commission consultation on Sustainable Corporate Governance

FESE welcomes the opportunity to provide a response to the Commission consultation on sustainable corporate governance. We fully support the European Green Deal, the Sustainable Finance agenda and the global transfer of assets to a more sustainable economy to protect the earth and its natural resources for the next generations.

Since different companies cannot be managed the same way, we support maintaining principles for corporate governance in the existing format of codes. This way, companies are provided with useful guidance on governance, while allowing shareholders to decide on the best ways forward.

The Non-Financial Reporting Directive (NFRD) already requires companies in scope to identify the principal risks related to their business and how these are managed. In line with the Commission’s objectives for companies to provide further transparency on their ESG activities, FESE believes that the scope of the NFRD should be harmonised across Member States and include an EU level obligation for non-listed companies with more than 500 employees to disclose such non-financial information. Such requirements should not be introduced to SMEs due to the administrative costs and burdens deriving from such obligations. We believe that there should instead be a voluntary and simplified standard and/or reporting format for SMEs.

In addition, we emphasise that, if legislative binding-measures were to be adopted, the due diligence liability and duty of care must be binding for all similar companies regardless of whether they are listed or not. Such policies would otherwise disincentivise potential issuers from going public, which would be to the detriment of capital markets and the further development of the EU single market.