Hare and Hedgehog? The race between the Codex Commission and the EU Commission

Dear readers of GermanBoardNews,

until this Friday, those interested in corporate governance can comment on the reform proposals submitted by the Government Commission on the German Corporate Governance Code (GCGC). In justifying the need for reform, the Commission states:

Those who manage or supervise companies must take “ecological and social sustainability” more into account in the future. According to DCGK Chairman Rolf Nonnenmacher, expectations in this regard have “become much more specific. In addition, there would be “extended reporting obligations under the EU’s forthcoming Corporate Sustainability Reporting Directive (CSRD).”

But this is not the only project at the EU level: At the same time, the EU Commission is working flat out on its initiative for “Sustainable Corporate Governance.

Is corporate governance the new data protection?

I’m not sure that the two regulatory processes are intertwined. Seen from a distance, it seems to be more of a race for the most detailed regulations. What is clear, however, is that companies and decision-makers will have to deal with a flood of new regulations coming from different directions.

This threatens to be similar to what happened with data protection: an important and good issue is bureaucratized until it is discredited. Decision-makers see themselves as patronizing and grudgingly implement requirements instead of developing tailored solutions with positive verve.

Good governance: a question of heads – not papers

For me, the question is how long it will take all the clever minds to realize that good corporate governance is ultimately a question of heads and not of papers. I am convinced that the future of corporate governance belongs to personal governance.

Because we finally need to discuss how to convince decision-makers instead of persuading them. How we can make good governance a joint project of business, politics and regulators. How we can give the term a positive meaning and encourage decision-makers instead of bullying them.

Regular readers know: I have in mind a personnel governance code that is based on the VARD professional principles. This means that it is limited to central principles, the concrete implementation of which is then left to the decision-makers personally. Freedom and positive impulses instead of bureaucracy and coercion.

After analyzing the DCGK reform proposals and the EU plans, I am more convinced than ever that this would be the better way. Especially since Putin’s cruel war of aggression underscores how quickly the world is changing, how quickly old rules and certainties no longer count – and how important strong principles are.

In this spirit: #StandWithUkraine.Sincerely

Your Peter H. Dehnen