The EU’s upcoming sustainable corporate governance rules: What can businesses expect?

• 28/06/2021
• Articles

The growing political focus on the protection of the environment, human rights and labour rights may soon translate into additional obligations on companies in order to ensure the respect of such societal values throughout their entire supply chains. The European Commission (“Commission”) is likely to publish a legislative initiative on sustainable corporate governance,1 which would set out rules that require companies to address adverse sustainability impacts within their operations and international value chains. The Commission is also contemplating regulating the remuneration of corporate directors and enforcing them to integrate stakeholders’ interests and corporate sustainability risks into the implementation of the corporate strategy.

This client alert sets out what businesses can expect from the upcoming sustainable corporate governance initiative and its potential impacts on company operations and value chains. In section 1, we explain what the sustainable corporate governance initiative is before turning to the rules that the Commission is considering in section 2. Finally, in section 3, we briefly discuss the effects that these rules might have on businesses.