The European Union's concern in creating a regulatory framework for sustainable corporate governance that leads undertakings to focus not on short-term benefits, but rather on the creation of long-term value, aligning all the interests involved more effectively, arises from the conviction that only then will undertakings be able to adequately manage sustainability issues, both in their operations and in their value chain.
In addition, more and more studies show that the main reasons for short termism, especially by listed undertakings, are based on a restrictive interpretation of top management duties which are taken to be about maximizing immediate financial return over creating long term value based on a strategic sustainability perspective. In this context, legislative changes are expected concerning such matters such as the fiduciary duties of managers and their compliance, the alignment between officers’ compensation and the undertaking's long-term sustainability objectives, the incorporation of sustainability criteria/skills in the appointment process of the management body, among others.
VdA has been following up on the regulatory evolution that sustainable corporate governance issues are going through, in order to support its clients in a matter that will be increasingly decisive as the ESG framework becomes common to all business activities.