On Monday 11 September, the leaders of the G20 countries and the OECD approved the revised Principles of Corporate Governance to promote corporate sustainability, market confidence and financial stability, at the G20 Leaders’ Summit in New Delhi, India.
The revised version of the G20/OECD Principles of Corporate Governance aims to help companies adapt to changing capital markets while promoting market confidence and financial stability.
First published in 1999, the Principles have become the international benchmark for corporate governance. They are also one of the Financial Stability Board’s key standards for sound financial systems and form the basis of the World Bank’s Reports on the Observance of Standards and Codes (ROSCs) in the area of corporate governance.
The major contribution of this revision is the new chapter on sustainability and resilience. “This revision better reflects the role of corporate governance policies in addressing climate-related opportunities and risks”, explained Mathias Cormann, OECD Secretary-General, when presenting the revision.
This new chapter “provides a comprehensive set of recommendations on sustainability disclosure, according to international recognized standards and subject to external assurance”, he continued. Sustainable reporting standards are being developed by the EU and internationally (see EUROPE 13242/13, 13243/22).
This update also aims to support national efforts to improve the conditions under which companies can access capital market financing.
In Chapter 1, an analysis of companies’ sustainability policies and practices revealed that, given investors’ increased attention to sustainability issues, all 49 jurisdictions surveyed have established relevant provisions, specific requirements or recommendations for sustainability disclosure.
Only half of the jurisdictions have explicit provisions on the responsibilities of boards of directors with regard to sustainable development policies. Recent information on regulatory frameworks for environmental, social and governance (ESG) ratings and data providers indicates that only a few jurisdictions, mainly within the EU, have so far adopted such frameworks.
According to Mr Cormann, the Principles will help investors better understand who controls companies: “The principles apply equally to companies listed on stock markets, helping to ensure a level-playing field”.
They should also facilitate SMEs’ access to capital markets, for example by emphasizing the importance of flexibility and proportionality measures that lighten the regulatory burden and by supporting small businesses' access to public funding.
Read the revised Principles: https://aeur.eu/f/8i3
Read the Factbook: https://aeur.eu/f/8i6 (Original version in French by Anne Damiani)