By Paul Davies
Unprecedented globalisation, coupled with significant concerns around climate change, has taken environmental and social responsibility from a voluntary concept to something more obligatory and enforceable. Consequently, corporate governance has increasingly become a binding legal obligation in a number of jurisdictions. Demonstrable of such progression, the EU Directive 2014/95 will be enforced from 2017 – a Directive which increases reporting obligations of non-financial information. Member States will need to assess domestic legislation to ensure compliance with the new obligations under the Directive. For example, France notably revised its Commerce Code in August this year to accommodate the latest EU environmental and social governance (ESG) requirements.
Regional and international policy has have led the way. Since the Organisation for Economic Co-operation and Development (OECD) adopted its Guidelines for Multinational Enterprises in 1976, ESG has progressively featured in the legislation guiding businesses. Global Compact, undertaken by the UN in 2000, introduced voluntary participation to comply with its Ten Principles – principles which enhanced ESG. This move prompted the EU Commission to debate how Europe could better promote corporate social responsibility (CSR) to achieve greater transparency and accountability among its member states.