The chair of the European Parliament’s Environment Committee, Pascal Canfin (Renew Europe, France), explained to a few journalists on Monday 31 January the measure he has recommended and which he would like the European Commission to include in its package on sustainable corporate governance.
Along with some 30 European company directors, he had sent a letter to the European Commission on Tuesday 25 January 2022, proposing to include in the legislative proposal expected in mid-February a regulatory provision aiming to link the granting of bonuses to directors to the achievement of the sustainability objectives set by their company (see EUROPE 12675/10).
“There is a debate in the Commission at the moment about whether this is going too far, whether it should be done by Europe. This is a sovereignty debate”, he explained. He also said that “it is up to the company to choose the percentage of the bonus, but Europe must create the relative framework”, notably in terms of scope and remuneration.
The MEP’s proposal is to link executive bonuses, which are currently only linked to short-term financial performance, to their company’s environmental commitments. This indexation could be between 10 and 20%, or even 30%, for environmental objectives, “to make them credible”, according to Mr Canfin. These targets could cover different aspects, such as plastics reduction, climate change, and biodiversity preservation.
“There is no need for impact studies, as companies have already done it and it has been proven to be effective. And this does not entail any additional costs for the States”, argued Pascal Canfin.
The legislative package will also include other measures such as: - the introduction of a civil liability mechanism and legal remedies for victims; - a ban on the import of products linked to serious human rights violations, such as forced labour and child labour (see EUROPE 12876/11). (Original version in French by Anne Damiani)