Newsletter ESG and Law, August 2020

The EU Commission publishes the “Study on directors’ duties and sustainable corporate governance” – Approaching the concretisation of a turnaround in corporate governance in Europe from “short termism” to “long termism”?

The “Study on directors’ duties and sustainable corporate governance” (“Study”) prepared by EY addresses centrally the phenomenon of “short termism”, the short-term thinking in corporate governance (Study on directors’ duties and sustainable corporate governance – Publications Office of the EU). The focus of corporate decision-makers on short-term shareholder value maximisation instead of long-term corporate interests reduces the long-term economic, environmental and social sustainability of European

companies, according to the underlying thesis of the Study. The Study uses data material from recent decades to substantiate the phenomenon of short termism, and then presents essentially seven main causes (“Drivers”) of short termism as well as three possible responses by the European Commission (“Commission”) as remedies.

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