Promoting good corporate governance and sustainability policy

Eumedion is generally positive about the proposed Corporate Sustainability Due Diligence Directive (CSDD proposal). This is evident from the Eumedion feedback statement on the proposed directive, which was submitted today. 

According to Eumedion, the proposed directive will help to ensure that large European and non-European companies operating in the European market do business in a decent and fair manner throughout the entire value chain. Eumedion does feel, however, that the CSDD proposal should be strengthened on a number of points. For example, companies should not only identify and prevent adverse impacts of their activities on human rights and the environment, but also on climate. In addition, Eumedion believes that the climate action plans that large companies have to prepare on the basis of the proposed directive should contain science-based CO2 emission reduction targets and that such plans should be verified by an independent, external party. Finally, Eumedion is of the opinion that the proposal for a directive must be clarified on some points. It is unclear, for instance, whether the proposed directive also applies to the investee companies of institutional investors and, if so, what the investors’ obligations in that respect are. In addition, Eumedion recommends that the scope of the proposed directive be aligned with other relevant European financial sustainability legislation, such as the CSRD, SFDR and the Taxonomy Regulation.

All Dutch listed companies are expected to prepare a transition plan in the coming year in order to operate completely climate-neutral by 2050 at the latest. The transition plan must contain short-, medium- and long-term CO2 emission reduction targets and explain how the company intends to achieve these targets. The plan must be discussed with the shareholders. Companies that have a relatively large impact on climate change or that otherwise face major climate risks are encouraged to submit their progress report on the road to climate neutrality to the shareholders’ meeting for an advisory vote.

This request is incorporated in the Focus Letter 2022 that Eumedion has sent to all Dutch listed companies. The Focus Letter contains the topics that tend to be discussed in the dialogues Eumedion facilitates between Dutch listed companies and Eumedion members in the run-up to the 2022 shareholders’ meetings. The companies are encouraged to have the CO2 emissions reduction targets validated by the Science Based Targets initiative (SBTi) and reviewed by the external auditor. The reduction targets must relate to both the company's own activities and those of suppliers, customers and end users (i.e. the entire value chain; the so-called scope 1, 2 and 3).

Eumedion writes in the letter that the next ten years are crucial for still being able to prevent dangerous climate change. Eumedion believes that all listed companies, shareholders and external auditors have a responsibility to contribute to this objective (however small it may be). Companies are expected to report annually on their progress in meeting their CO2 reduction targets. Shareholders can then monitor progress and, if necessary, push for acceleration. External auditors can issue an independent assessment of the 'thoroughness' of the reduction targets and how they fit in with the company's operational and financial plans.

In addition to preparing climate transition plan, Eumedion has requested Dutch listed companies to also report on their diversity and inclusiveness policy (including objectives) for the entire workforce and on the effectiveness of their measures (and procedures) to ensure that human rights are safeguarded throughout their value chain.