Response to Commission Consultation Document Proposal for an Initiative on Sustainable Corporate Governance

09 February 2021

Consultation response

Finance Watch calls for an EU framework on director duties and due diligence in its 8 February consultation response.

They include:

  • A call for an EU framework specifying directors’ duty to act in the company’s long-term interest while taking into account broader stakeholder interests – moving away from the ‘shareholder primacy’ or ‘profit maximization model’ to a stakeholder-focused economic model.
  • Setting the right incentives can be a powerful tool to encourage certain behaviours and corporate decisions. Finance Watch strongly suggests to align corporate directors’ pay with corporate sustainability targets  (50% of variable remuneration).
  • Complement EU rules on directors’ duties with a mandatory environmental and human rights due diligence in corporate operations and global value chains.