EUU, Alm.del - 2020-21 - Bilag 282: Notat og høringssvar vedr. kommende initiativ om bæredygtig selskabsledelse

Europaudvalget 2020-21
EUU Alm.del Bilag 282
Offentligt

NOTE

1. februar 2021

Annex regarding the initiative on corporate governance

The Danish Government acknowledges that in order to achieve e.g. the

goals of the Paris agreement on climate change and the Sustainable Deve-

lopment Goals it is vital that businesses contributes to a sustainable deve-

lopment. The Danish Government believes that sustainability, growth and

competitiveness must be aligned and not be contradictions.

The Danish Government agrees with the Commission that it is necessary

to empower directors to further integrate a wider range of interests into

corporate decision-making than just the interests of the shareholders in or-

der to avoid a narrow focus on the short term. This includes but is not li-

mited to the interests of employees and the environment.

The Danish Government believes that introducing mandatory due dili-

gence as described in the response, would be the most effective and pro-

portionate instrument to achieve this empowerment. The Danish Govern-

ment finds that hard regulation of directors’ duties and liability could ham-

per the ability of companies to deliver on the sustainability agenda in the

most effective way.

Directors’ duties and directors’ liability

The possibility for a company to buy back shares is an important instru-

ment to adjust the capital structure of the company. It may make sense for

companies not to have large cash holdings, for example because of low

interest rates, but instead pay out dividends to the shareholders. If restric-

tions are imposed on the management of companies in relation to the

payout of dividends and share buybacks, it will limit the ability of the ma-

nagement to act in order to make the necessary and effective decisions for

the benefit of the company.

Furthermore, the right for stakeholders to influence the directors’ decision-

making is not accompanied with a corresponding risk and liability of the

stakeholders for such decisions. This imbalance is a heavy and dispropor-

tionate burden on the companies.

Stakeholders’ involvement in company decisions and enforcement of the

duty of care

It is a matter of companies’

license to operate

today to consider the diffe-

rent interests from stakeholders that are relevant. Such stakeholders

include but are not limited to the interests of employees, the environment,

EUU, Alm.del - 2020-21 - Bilag 282: Notat og høringssvar vedr. kommende initiativ om bæredygtig selskabsledelse

NGO’s, customers etc. The companies’ focus on relevant stakeholders’ in-

terests is also necessary in order to attract qualified employees, and is ex-

pected to become increasingly relevant in the coming years.

However, requiring companies by law to identify the company´s stakehol-

ders and their interests in order to manage risks for the company and to

identify the opportunities that arise to promote the interests of the stake-

holders, could have a number of negative and unintended effects. E.g. the

companies’ access to venture capital could be weakened, as well as the

possibility to have a well-functioning capital market within the EU in ge-

neral. It is important to note that it is the task of the shareholders at the

annual general meeting to decide whether they can support the manage-

ment’s strategy for the company’s development, sustainability and goals.

Furthermore, the proposal is based on the assumption that there by nature

is a fundamental conflict between the shareholders’ interests and the com-

pany’s long-term strategy, and furthermore, that shareholders’ interests by

definition are short term economic interests solely focusing on maximizing

profit. This is not always the case. In general, shareholders including large

institutional investors are pushing the companies forward on the sustaina-

bility agenda and forcing companies to take into account the risk of e.g.

climate changes and the costs of the transition to sustainable development.

Many shareholders, including pension funds and other institutional inve-

stors are at the forefront of the movement to transition the society in a

sustainable way.

Principle of subsidiarity

The area of corporate governance is based on various different legal and

economic traditions in different countries, and in Denmark, there is a

unique tradition and model of corporate governance. Many Danish compa-

nies are already operating with a high focus on sustainability. The Danish

Government therefore is concerned that it could be difficult for all member

states in the EU to agree on such a high level of sustainable corporate

governance and that questions can be raised as to how harmonized legisla-

tion would interplay with legal and economic traditions across the EU

countries. Consequently, we are of the opinion that regulation of corporate

governance at member state level is more appropriate, efficient and in com-

pliance with the principle of subsidiarity.