ISS Discusses Big EU Changes to Corporate Governance Oona Huttunen

The rationale behind a number of recent EU legislation changes focusing on corporate governance has been to prioritise a long-term focus on governance through various transparency measures as well as some concrete requirements for action, and on allowing shareholders and other stakeholders to be well informed. This is evident in the revised Shareholder Rights Directive adopted in 2017, and also in the most recent legislative initiatives discussed in this review. The Corporate Sustainability Reporting Directive and the proposed directive on Corporate Sustainability Due Diligence revise current obligations and introduce new ones under EU law regarding company disclosure and corporate governance practices. Additionally, the new November 2022 Directive on gender balance on company boards seeks to harmonise and improve Member State practices regarding gender representation on company boards.

This review takes a look at the recent legislative initiatives noted and discusses their possible impacts on the Annual General Meeting (AGM) agendas of European companies in the upcoming years. Drawing conclusions from these multiple initiatives rather than examining each individually can help us to better understand the general direction of corporate governance and EU legislation in the European context.

The first half of this review discusses the selection of EU legislative initiatives that will have impact on shareholder meetings, and the status of these legislative procedures. The second half highlights some notable themes and potential impacts of AGMs across these legislative pieces.

Corporate Sustainability Reporting Directive

In 2021, the European Commission adopted a Sustainable Finance Package to help the flow of money towards sustainable activities across the European Union and considered by the European Commission as instrumental in making Europe climate neutral by 2050. Part of this package is a proposal for a Directive on Corporate Sustainability Reporting (CSRD, CSR Directive). In June, 2022, the EU Parliament and Council announced that they had reached a provisional political agreement on the proposed CSR Directive and on January 5, 2023, it (CSR Directive (EU) 2022/2464) entered into force.

The CSR Directive revises and extends the scope of the Non-Financial Reporting Directive (NFRD). The NFRD entered …


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