Friday, October 23, 2020

European Corporate Governance Institute Research Network Full Picture Series: Workshop on "Ernst and Young Study on Directors' Duties and Sustainable Corporate Governance" 11-13 November 2020


Pix Credit: HERE

It is not only states that have been undergoing ideological turmoil and core factional battles since  the start of the second decade of the 21st century.  Those battles--over the character of market economies, of Leninism, of democratic participation, of the character of public duty and private responsibility, of the character of governance as jurisprudential or data driven--have spilled over into corporate governance debates as well. Core corporate principles, and the foundations of enterprise legalities--as law, culture, expectations, are being challenged and factions of influential academic, bureaucratic, and governance elites are now invested in substantial transformations--or in the development of countermeasures--to reshape the Weltanschauung of enterprises, and with it of economic activity--in global orders emerging from the general instability that has marked the world since 2001.

 This spillover is not serendipitous.  Neither is its character.  Factional battles over the soul of corporate law--who does the corporation serve,--what is the character of the the responsibilities of  the board and its officers, what are the duties of the enterprise to an identifiable universe of groups with which it might be connected by relations of proximity, control, contract, or politics--are converging with more general elite factional battles (different within liberal democratic and Leninist systems of course) respecting (1) the character of the relationship of the individual to public and private bodies, (2) the de-centering of the individual from the rights and obligations of communities, and (2) ultimately the de-centering of humanity from the core duty to preserve and sustain the planet.  

In the context of the regulation of economic enterprises, the spillover is threatening, that is threatening to the autonomy and character of corporate regulatory and operational principles--as it has been since the 1970s (recounted  years ago when the great priestly keepers of corporate orthodoxy did not think this much worth notice in Backer, Larry Catá, Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law. Columbia Human Rights Law Review, Vol. 37, 2005, Available at SSRN:

And now the priestly magisterium of corporate regulation--the keepers of the temple of corporate Weltanschauung have also begun to intervene. The Americans have their renewed project on principles of corporate law through the American Law Institute, and now the Europeans, also moved to act, if only in response to this sideways attack on corporate regulatory systems by way of efforts to get states to negotiate a treaty on business and human rights and the embedding of sustainability principles in corporate operation. That latter effort was marked by the distribution of a a study by Ernst & Young (EY) on directors’ duties and sustainable corporate governance published in 2020 which was meant to serve as the platform from which the European Commission would engage in a bit of law reform itself. 

But seeing this as a potential threat to their position as drivers of policy, the global academic elite now seeks to intervene. To the extent of interlinkages (e.g., in one manifestation here) between academic and bureaucratic elites this may prove useful to both and certainly contribute to their hold on status as the political or at least normative vanguard under whose leadership corporate regulation will change. It is in that context that the European Corporate Governance Institute (ECGI) has associated itself with the organization of a workshop to bring together those academic and bureaucratic drivers of policy for the purpose of intervening in the process of anticipated reform.  That intervention must be signaled of course--and that signalling is heralded by this Workshop.  But its deeper meaning is intimated by the conversations, off the public record, and the deepening interlinkages, that this event may produce.

It may therefore be of some use, especially for those on the outside (who might at some point be allowed in for engagement at the margins), to take notice of and participate in what is likely to be an important publicly visible step in the inexorable movement of corporate law from where it sits now to some other place. That place is likely to be one that is substantially more risk averse, increasingly compliance and accountability oriented, and seeped with public responsibility delegated to it as a manifestation of its growing character as a privatized administrative organ of either states or international actors.  Now THAT is what will be truly transformative, and a transformation that our magisterial will contribute, but perhaps without much thought.  And it is the thoughtlessness--the "short termism" (to be ironic given one of the targets of the effort)--that ought to worry those who might want to take a longer and broader view of these efforts.  There is indeed some irony that this event is being held even as the UN Intergovernmental Working Group holds its 6th session on cobbling together a draft Business and Human rights treaty that would upend corporate law and principles as part of a project that in its own way is deeply suspicious of markets and of private concentrations of capital that are not tightly managed by the state through constraining international "law."

Workshop registration information follows along with the organizers' description of the recent, its importance, and the identity of those who will shape it.  My own reflections on the study and what it portends follows in a later post.




Based on a study by Ernst & Young (EY) on directors’ duties and sustainable corporate governance published earlier this year, the European Commission is considering broad-sweeping reforms of corporate governance which will deeply affect European companies. The EY study has stimulated a lively discussion about the impact of short-termism. A number of scholars responded to the Commission’s consultation, urging policymakers to consider the full extent of the existing literature and established findings on the topics referenced. In an effort to address these gaps and to contribute to the current policy debate, ECGI will convene leading scholars in a workshop format to discuss these issues. Following an initial presentation of the report, ECGI research members will then discuss the topics covered by the report and the policy options currently considered by the European Commission. It is possible to attend this workshop by registering below.
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Marco Becht (Solvay Brussels School and ECGI)
Luca Enriques (University of Oxford and ECGI)
Alexander Ljungqvist (Stockholm School of Economics and ECGI)


11 November 2020 
14:30 - 17:00 (CET) | 10:30 - 13:00 (EST) 
Day 1 | Introduction
Luca Enriques (University of Oxford and ECGI)

Presentation of the Report
Roberto Giacomelli, Associate Partner at EY | Climate Change and Sustainability Services

Keynote Briefing: “What Do Financial Economists Know About Short-Termism?”
Zacharias Sautner (Frankfurt School of Finance & Management and ECGI)

Response to the European Commission’s Consultation by ECGI Research Members
Responder:  Wolf-Georg Ringe (Hamburg University and ECGI) (Response 1)
Discussion: John C. Coffee, Jr. (Columbia Law School and ECGI); Oren Sussman (University of Oxford and ECGI)

Day 1 | Concluding remarks
Marco Becht (Solvay Brussels School and ECGI)

12 November 2020 
14:30 - 17:00 (CET) | 10:30 - 13:00 (EST) 

Day 2 | Introduction
Luca Enriques (University of Oxford and ECGI)

Responses to the European Commission’s Consultation by ECGI Research Members
Responder: Paul Davies (University of Oxford and ECGI) (Response 2)
Responders: Mark Roe (Harvard Law School and ECGI); Holger Spamann (Harvard Law School and ECGI) (Response 3)
Discussion: Jesse Fried (Harvard Law School and ECGI); Jennifer Hill (Monash University and ECGI); Marc Goergen (IE and ECGI); Theo Vermaelen (INSEAD and ECGI) 

Day 2 | Concluding remarks
Marco Becht (Solvay Brussels School and ECGI)

13 November 2020 
14:30 - 17:00 (CET) | 10:30 - 13:00 (EST) 

Day 3 | Introduction
Lucrezia Reichlin (London Business School), Chair, ECGI

Responses to the European Commission’s Consultation by ECGI Research Members
Responder: Alex Edmans (London Business School and ECGI) (Response 4)
Responder: Steen Thomsen (Copenhagen Business School and ECGI) (Response 5)
Discussion: Mariassunta Giannetti (Stockholm School of Economics and ECGI); Amir Licht (IDC Herzliya and ECGI); Rolf Skog (University of Gothenburg and ECGI)

Day 3 | Concluding remarks
Marco Becht (Solvay Brussels School and ECGI)

Useful links:
Workshop Registration:
EY Report:
All Public Responses to the Consultation:
Submitted Response from Wolf-Georg Ringe:
Submitted Response from Paul Davies and Rolf Skog (ECLE group):
Submitted Response from Mark Roe and Holger Spamann:
Submitted Response from Alex Edmans:
Submitted Response from Steen Thomsen: and

About this event

Studies of this type are usually a stepping stone for policy proposals that will be put forward for consideration by the EU Member States and the European Parliament.

In the words of the Commission:
“the Study found a clear trend of short-termism in the focus of EU companies. It identified key drivers of this issue, ranging from the narrow interpretation of directors duties and the company’s interest with the tendency to favour the short-term maximisation of financial value, through growing pressure from investors and the lack of a strategic perspective on sustainability all the way to the limited enforcement of the directors’ duty to act in the long-term interest of company. In order to lengthen the time horizon in corporate decision-making and to promote a corporate governance that is more conducive to sustainability, the Study also identified specific objectives that EU intervention could aim to reach".
The Study identifies a number of policy options for the European Commission to consider (summarised at pp. 51-60), which may deeply impact corporate law and/or governance across the European Union. Topics include directors’ duties, the company’s purpose, corporate disclosures, executive compensation, and engagement with stakeholders.

The European Commission held a public consultation on these policy options, which  closed on 8 October 2020, and it is expected to issue proposals at the beginning of 2021, if not earlier.

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