ecoDa newsletter – February 2021

EcoDa:n kuukausikirjeessä tietoa tulevista tapahtumista, kestävästä hallinnoinnista sekä kyselyn tuloksia hallitustyöstä koronakriisin aikana.

1. ecoDa’s Response to the EC Consultation on Sustainable Corporate Governance

If ecoDa agrees on the overarching goal of the European Commission to promote sustainable value creation by companies, ecoDa questions the path taken by the EC to reach this intention. Indeed, in our response, we warned about possible pitfalls that a legislation could bring:
• The notion of duty of care should not be modified at a risk of creating confusion and imprecise considerations;
• It should be up to board members to define which stakeholders make sense for their business model and how to integrate their interests during their decision-making;
• The EC should refrain from laying down prescriptive rules on board composition regarding sustainability;
• Any regulation should be better evidence-based.
In addition, ecoDa is inviting the European Commission to promote education for board members on sustainability.

2. Report: corporate governance and short-termism, an in-depth analysis of Swedish data

The Stockholm School of Economics, with the support of the Swedish Academy of Directors, member of ecoDa, has published a report scrutinizing the claims of the past EC Study on directors’ duties and sustainable corporate governance by examining potential signs of financial short-termism related to excessive dividend policies.
Based on an analysis of companies listed on the Swedish stock market (786 firms in total), the empirical findings demonstrate that 44 % of companies do not pay out a dividend, the payout ratio of the firms depends on their life cycle, and the firms with the highest dividend payout are also the firms with the highest profitability while at the same time performing well in terms of sustainability reporting and sustainability ratings.
The report concludes stating that there are no material indications of financial short-termism in Sweden.

3. GNDI Survey: Board Governance during the COVID-19 crisis

Between August and November 2020, nearly 2,000 directors across the globe participated in the 2020–2021 GNDI Global Director Survey, representing 17 director institutes (among them, ecoDa, as a member of the GNDI). The report explores how boards across the globe are navigating the economic and social impacts of the COVID-19 crisis and its unprecedented impact on business and society. The main common and major trends highlighted in the study are:
• 72% of directors surveyed gave high marks to themselves and to their management teams for the performance of their crisis response plans;
• 70% of directors surveyed indicated they expect to see a greater role for outside experts in risk scenario planning and decision making;
• Virtual board meetings are here to stay;
• Two-thirds of directors surveyed reported that over the past year their time commitment increased by 50% or more.

4. ecoDa’s March Education Program

ecoDa’s online March Education Program is now open to registrations. These three half-days of Professional Development have been designed for European Directors who are eager to embrace the complexity of corporate governance in Europe. Each day will focus on an overarching topic:
• March 10th: Diversity in Corporate Governance frameworks;
• March 11th: Corporate Governance as a tool to create business opportunities;
• March 12th: Leadership & behaviours at board level.

5. Summary Report of ecoDa’s Webinar on ”ESG: From Awareness to Strategic Moves”

On the 10th of February, ecoDa organised a webinar on ”ESG: From awareness to strategic moves”.
The panelists agreed that embracing ESG matters will not happen overnight. In order to lead the transformation and deal with ESG matters, board members need to be well equipped, and that goes through training to upskill. It is important to make sure that all board members are on the same page. The biggest challenge for board members is certainly the capacity to make strategic decisions while dealing with conflicting stakeholders’ expectations. What matters is to make sure that sustainability is on the agenda of each board meeting.
The panelists also elaborated on tools to measure ESG performance to bring about real change, and make sustainability part of the company’s DNA. Finally, there was a strong consensus on the fact that non-financial reporting is becoming as important as financial reporting, and that regulators should refrain from regulating how companies should operate when market forces are already driving them in the right direction.
The recording of the webinar is available as well as a summary report.

6. ecoDa-Mazars Past Joint Event

On the 19th of January, ecoDa and Mazars have organised a joint event on ”Sustainable corporate governance for long term business success”. The recordings of the panel discussions which took place concurrently with contributions from members of the European Commission, the OECD, ESMA, leading board members and investors across Europe are available on ecoDa’s Youtube channel. In addition, a summary note has also been published, summarizing the main takeaways from the event.

7. A new episode in ecoDa’s series ”European Board Members Walking the Talk”

In this new episode, ILA, The Luxembourg Institute of Directors’, interviewed several CEOs and Board members of European companies, to discuss how board members can lead and drive sustainable change.