High compliance rate with Dutch Stewardship Code by Eumedion participants

High compliance rate with Dutch Stewardship Code by Eumedion participantsNews · 16-06-2021

Eumedion participants have been working to further improve the integration of the principles of the Dutch Stewardship Code into their policies and reports. This follows from the today published second Implementation Progress Report.

Compared to the first report (2019), this second report includes further qualitative assessments of the various ways Eumedion participants seek to comply with the Code in a meaningful way. As in 2019, the report addresses the key focus areas of transparency around voting behaviour and engagement programs. Additionally, the current report also discusses if and how participants communicate with other relevant stakeholders of investee companies, in order to enhance their engagement with these companies.

As in 2019, the report shows a high level of compliance with the requirements on voting behaviour transparency. In addition, the report presents the various methods used by participants to explain 'significant votes'. The report discusses and reiterates the importance of providing adequate and easily accessible information to show how participants use their voting rights to contribute to meaningful stewardship outcomes, better checks and balances within Dutch listed companies and long-term value creation of these companies. With regard to engagement programs, the report paints a similar picture. Here, too, the results show that participants can further improve their disclosure on engagement efforts by enhancing the consistency between their reporting on the selection and prioritisation of engagement themes, the objectives and targets that accompany those themes, and the subsequent results.

Lastly, the results confirm that collaboration with other shareholders is common practice among participants. However, it often remains unclear how communication with other stakeholders of an investee company takes shape. Striving to understand the aspirations and motivations of other relevant stakeholders of the company (e.g. banks, creditors, customers, suppliers, the works council and NGOs) may advance the goals of stewardship. Participants are therefore encouraged to show more clearly what their approach is to this aspect of the Code, and if and how such communication, in practice, informs their engagement activities.

Eumedion supports SEC involvement in sustainability reporting

Eumedion supports SEC involvement in sustainability reportingNews · 14-06-2021

Eumedion encourages the US securities regulator SEC to oblige US listed companies to publish sustainability information. Eumedion also encourages the SEC to strive for international convergence of sustainability reporting through the International Sustainability Standards Board (ISSB) of the IFRS Foundation, which is to be established shortly. This is what Eumedion writes in its input for the SEC consultation on climate and sustainability reporting. Last March, the SEC requested stakeholders whether the stock exchange regulator should draw up reporting standards in the field of climate and any other sustainability areas. Eumedion encourages the SEC to indeed take up this topic, partly because sustainability information for institutional investors is increasingly important information for taking investment decisions. Moreover, this information is a precondition for the shareholders' ability to hold a company's board to account for its sustainability performance. Eumedion does urge the SEC to work towards international harmonisation of sustainability reporting as soon as possible. Eumedion had already done so earlier with the European Commission regarding its proposal to prepare European reporting standards for sustainability information.

Eumedion supports proposed European gender pay gap directive

Eumedion supports proposed European gender pay gap directiveNews · 23-04-2021

Eumedion supports the proposal that requires companies with at least 250 workers to publish information on the gender pay gap. This follows from Eumedion’s response to the European Commission's proposal for a directive on the principle of equal pay for equal work.

In the proposed directive provisions are introduced with the aim of combating inequality in pay between women and men. In its response, Eumedion indicates that inexplicable pay differences between women and men are unacceptable and that it sees fair and equal pay as an essential part of good employer practices. Eumedion also indicates that the primary responsibility for complying with the legal provisions on equal pay rests with the company board(s) but that shareholders also have a role to play. Eumedion points out that a necessary condition for fulfilling this role is that shareholders have sufficient information. Eumedion therefore welcomes the proposal that requires companies with at least 250 workers to publish information on the gender pay gap. Eumedion indicates that shareholders can include that information in their dialogues with companies and raise this topic at shareholders meetings. In addition Eumedion indicates in its response that the aforementioned proposal would help institutional investors to comply with their own reporting obligations under the regulation on sustainability-related disclosures in the financial services sector (SFDR). Eumedion points out that currently the data needed to report on this is not available. Furthermore Eumedion advocates that the information on the gender pay gap is included in the management report.

Eumedion moderately positive about proposed European directive on corporate sustainability reporting

Eumedion moderately positive about proposed European directive on corporate sustainability reportingNews · 21-04-2021

Eumedion supports the European Commission's proposal to soon develop European sustainability reporting standards. However, these European reporting standards should, as far as possible, make way for international sustainability reporting standards in the medium term. Only if the European Union (EU) has specific policy objectives in the area of sustainability, there is room for a European sustainability reporting standard in that area. In all other cases, the EU should follow the international reporting standards prepared by the IFRS Foundation’s International Sustainability Standards Board. This is Eumedion’s key message regarding the European Commission's proposal for a directive on corporate sustainability reporting that was published today.

Eumedion is pleased that the European Commission has included a mechanism in the proposed directive whereby the sustainability reporting standards are to be reviewed every three years, taking into account the developments with regard to international standard. Eumedion also welcomes the proposal that the external auditor should provide at least limited assurance on the sustainability information reported by listed companies. Eumedion believes, however, that the external auditor should provide reasonable assurance on the specific sustainability targets and indicators that need to be disclosed in conformity with the sustainability reporting standards. According to Eumedion, this would enhance the quality and reliability of the reported sustainability information. 

Eumedion advocates far-reaching transparency on tax payments by multinationals

Eumedion advocates far-reaching transparency on tax payments by multinationalsNews · 15-04-2021

Eumedion believes that every multinational should not only disclose their tax contributions for all EU Member States, but for all countries they operate in. In addition, this country-by-country tax information must be audited by the external auditor. This follows from the statement Eumedion published today with respect to the proposed European directive on country-by-country tax reporting.

Eumedion has always supported the European Commission’s proposal to introduce an obligation for multinationals to publicly report where taxes are paid (‘country-by-country tax reporting’). Promoting greater disclosure of taxes paid per jurisdiction increases overall transparency and allows for a more detailed analysis by investors and better engagement on tax-related topics. In the light of the current negotiations between the EU institutions, Eumedion has published a statement with some comments on the positions of the European Parliament and the European Council. In the statement Eumedion writes that it supports the position of the European Parliament that the country-by-country information should not only be provided for each EU Member State but also for each tax jurisdiction outside the European Union. Furthermore, Eumedion states that it believes that the directive should be strengthened by requiring that the information in the country-by-country report should be audited by the external auditor. And by requiring that the aforementioned information shall be published as an annex to the annual financial statements.

Eumedion in favour of targeted European harmonisation of insolvency law

Eumedion in favour of targeted European harmonisation of insolvency lawNews · 25-03-2021

Eumedion believes that targeted harmonisation of certain definitions and procedures would help investors better manage legal risks of their cross-border exposures. This is the view of Eumedion in its response to the Eurpean Commission's consultation on the convergence of insolvency law of EU Member States that was submitted today.

In December 2020, the European Commission published a consultation document on the convergence of insolvency law. Eumedion is of the opinion that discrepancies between the Member States' insolvency laws may create barriers to the free movement of capital in the internal market. In its response Eumedion refers to the diverging time-limits, lengths of procedures as well as diverging overall procedural efficiency. This may make it more difficult to anticipate the outcome for value recovery, making it harder to price risks, including for debt instruments. Eumedion points out that generally the longer restructuring processes take, the more value is destructed for investors. In its response Eumedion endorses the remark in the Final Report of the High Level Forum on the Capital Markets Union that targeted harmonisation of certain definitions and procedures would help investors better manage legal risks of their cross-border exposures. 

Eumedion supports the establishment of a European Single Access Point

Eumedion supports the establishment of a European Single Access PointNews · 03-03-2021

Financial and non-financial information of listed companies should as soon as possible be made available in a centralised European database. This publicly accessible database will support institutional investors in gathering and processing relevant information on investee companies, as Eumedion writes today in its response to the European Commission’s consultation on the establishment of a European Single Access Point (ESAP).

Essential to the success of this database is a large coverage of structured data. It is therefore of crucial importance that also non-financial information is digitally tagged and filed in a uniform manner. Of particular importance to institutional investors is furthermore the alignment of company filings in ESAP with reporting requirements such as those stemming from the Sustainable Finance Disclosure Regulation and the Taxonomy Regulation. To ensure a speedy start to the ESAP, Eumedion suggests the European Commission limits the scope of the ESAP to both financial and non-financial information that listed entities are required to make public due to the fact they have, or aim to list, securities on a European regulated market.

Eumedion pushes for legal embedding of stakeholder model at European level

Eumedion pushes for legal embedding of stakeholder model at European levelNews · 05-02-2021

The boards of all European listed companies should be required to balance the interests of all relevant stakeholders when taking their decisions. They should also be obliged to report on how the various interests have been considered in the discussions and decision-making. This follows from the today’s submitted Eumedion response to the European Commission’s consultation document on the contents of the forthcoming proposal for a European directive on sustainable corporate governance and due diligence. 

Eumedion is in favour of incorporating the ‘stakeholder principle’ into European law. This stakeholder principle can be elaborated in more detail at national level, given the specificities of the corporate governance model in individual EU Member States. Eumedion is also in favour of mandatory due diligence rules for listed companies, provided that these are fully in line with international standards, such as those of the OECD and the United Nations. Furthermore, Eumedion suggests some technical amendments to the European Company Law Directive regarding share buybacks and supports the European Commission’s idea to require companies to consider environmental, social and/or human rights expertise in the director’s nomination and selection process. Eumedion is not in favour of additional EU legislation regarding the design and content of executive remuneration policies.

Eumedion supports the majority of proposed revisions to the ICGN Global Governance Principles

Eumedion supports the majority of proposed revisions to the ICGN Global Governance PrinciplesNews · 20-01-2021

Eumedion is generally positive about the proposals to revise the Global Governance Principles (GGP) of the International Corporate Governance Network (ICGN). Eumedion only has a number of reservations regarding the proposals that are mainly inspired by Anglo-Saxon practices and regarding a number of proposals in the field of financial and non-financial reporting. This follows from the today’s submitted Eumedion reponse to the ICGN consultation document on the proposed revisions to the GGP. The GGP are used by many institutional investors in shaping their international voting and engagement policies. In its comments, Eumedion questions the proposal that all the company's directors should stand for re-election on an annual basis. Eumedion doubts whether the concept of annual re-election of all board directors is an already widely accepted principle amongst institutional investors. Eumedion points out that this concept is not common practice in a number of important continental-European countries. Eumedion suggests that shareholders of all listed companies should at least have the opportunity to put a proposal for the dismissal of one or more directors on the agenda of a shareholders meeting. Eumedion also criticises the introduction of the principle of conservatism regarding the valuation of assets and liabilities and the calculation of income and expenses. Eumedion believes that useful reporting is generally best served by standard setters to set neutral standards, and by a requirement for listed companies to apply these standards in a neutral manner. 

Eumedion: independence is key in possible European sustainability reporting standard setting process

Eumedion: independence is key in possible European sustainability reporting standard setting processNews · 07-01-2021

If the European Commission decides to create a European standard setter for sustainability reporting, then a non-politicised, independent process for developing such standards is key. Eumedion underlines the importance of an independent standard-setting process in its response to the preliminary proposals of the chairman of the board of the European Financial Reporting Group (EFRAG) regarding changes to the governance and financing of EFRAG. In June 2020, the European Commission invited EFRAG Chair Jean-Paul Gauzès to make recommendations on this matter if EFRAG were entrusted with the development of possible EU non-financial reporting standards. The European Commission will probably take a decision on this topic in March. 

In its response, Eumedion writes that the future members of the so-called European Non-Financial Reporting Board should be selected on the basis of professional competence, relevant experience, track record, professional background and diversity instead of a specific number of representatives from the relevant stakeholder groups. Eumedion also endorses the importance of an open and transparent non-financial reporting standard-setting process, including a consultation period of at least three months on proposed non-financial reporting standards.