Will supervisory boards have to call Greenpeace in future? Comments on the EU Governance Directive

Dear readers of GermanBoardNews,

important decisions by boards of directors and supervisory boards could be significantly delayed in the future. With the “Directive on Sustainable Corporate Governance”, the EU is planning new due diligence requirements for decision-makers and expanded legal action options for civil society groups. The Commission intends to present a first draft this month.

At the heart of the rules is the obligation to take into account the interests of all stakeholders. However, this is already enshrined in German company law and the social market economy. In addition, I wonder: Will supervisory boards have to ask Greenpeace or the German Environmental Aid Association before making decisions in the future in order to be on the safe side legally and to prevent lawsuits?

Regular readers of GermanBoardNews know that I am a great advocate of the stakeholder value principle and argue for it to be more firmly anchored in the stock market (especially against short-term thinking and activist investors). But I fear that the EU is throwing the baby out with the bathwater and crossing the threshold into over-regulation.

Where is the protest from boards of directors and supervisory boards?

That is why I would like to remind you: Climate protection can only succeed with a strong economy and together with the decision-makers. Overburdening them with more and more new requirements and swinging the liability club is counterproductive. It is perceived as paternalistic and thus provokes resistance.

In addition, I see the danger that the directive delays important entrepreneurial decisions because the supposed “decision-makers” first have all possible new legal risks examined. If compliance experts and controllers stifle entrepreneurial spirit, that would be fatal for Europe as a business location – especially in this age of rapid technological change.

This is why supervisory boards and management boards should be protesting loudly against Brussels’ plans, but this is happening tentatively at best. Why do decision-makers now speak out on all kinds of political issues, but remain strangely silent when it comes to their own job – corporate governance?

Good work deserves more than a like

In GermanBoardNews we will continue to try to break the silence and give decision-makers a voice. This will be particularly important in the upcoming debates on the planned EU directive. I would therefore be delighted if you would support our work by becoming a member (this is possible from as little as five euros a month).

Sincerely

Your Peter H. Dehnen