On September 20, 2023, experts from the OECD and the business, board director, investor and accountancy communities came together to discuss what companies can do to promote sustainability and investor confidence. Their meeting was in the light of the new “Sustainability and Resilience” Chapter of the Revised G20/OECD Corporate Governance Principles at a joint IFAC, ecoDa and Business at OECD (BIAC) global webinar.

The revised G20/OECD Principles of Corporate Governance were given a final endorsement by leaders at the G20 Summit in September 2023. The revised Principles and their complementary publication, the 2023 Factbook, take account of global evolutions in corporate governance and capital markets. They also reflect shifts in stakeholder expectations, including in response to climate change. For the first time, the Principles include recommendations on sustainability.

BIAC, ecoDa and IFAC participated in all the phases of the Principles’ review. In order to raise awareness on the revised Principles, the three organizations jointly organized a lively discussion, which attracted over 300 live attendees across more than 150 jurisdictions. With a panel of global experts in corporate governance, the event explored the main features of the revised Principles, with a focus on the new chapter, “Sustainability and Resilience.”

A Pivotal Moment for Corporate Governance

Dan Konigsburg with Zoom background

Dan Konigsburg, Chair of BIAC’s Corporate Governance Committee, set the scene: “Business at OECD is particularly pleased with the inclusion of the new chapter on Sustainability and Resilience. The revised Principles have an emphasis on sustainability, on risk management, on improved transparency, and have profound implications for all businesses today. They pave the way for more market confidence and guide us on a path toward sustainable growth.”

“I have a call to action to all: get more involved to make the principles have a positive impact on boards and companies around the world,” he said.

Carmine di Noia with Zoom background

Carmine Di Noia, Director for Enterprise and Financial and Affairs at the OECD outlined the main updates to the Principles, which reinforce their three underlying key objectives:

  • Help companies access financing, particularly from capital markets.
  • Provide a framework to protect investors.
  • Support the sustainability and resilience of corporations, which, in turn, contributes to the sustainability and resilience of the broader economy.

“The new Sustainability and Resilience chapter of the Principles focuses on three major elements: the disclosure of sustainability related information; the responsibilities of the Board on sustainability matters, and the dialogue between a company and its shareholders and stakeholders on sustainability. A key cross-cutting focus of the revision, relevant to all three objectives, is to ensure accountability of board members and executives.”

“As we now move towards implementation, the new OECD corporate governance factbook will provide an important benchmark to monitor implementation of the revised Principles. But while the OECD can continue to provide analysis and guidance to promote better governance, we cannot succeed without the engagement of the private sector,” he pointed out.

Laura Leka with Zoom background

Laura Leka, Principal at IFAC, moderated a rich and insightful panel discussion that featured:

  • Pascal Durand-Barthez, Chair of ecoDa’s Advocacy Committee;
  • Odile de Brosses, Director of Legal Services at AFEP, and member of European Issuers‘ Policy Committee;
  • Sharon Ditchburn, Managing Director and Founder of Capital Advantage Consultants;
  • Paul Lee, Head of Stewardship and Sustainable Investment Strategy at Redington; and
  • Alejandro Marchionna Faré, Honorary Secretary and Academic Director of Instituto de Gobernanza Empresarial y Pública (IGEP Argentina)
OECD G20 Corp Governance panel on Zoom

Opening the discussion, IFAC’s Laura Leka said: “IFAC strongly supports the OECD in advancing high quality corporate governance and establishing the revised principles as the global benchmark for policymakers, for investors, corporations, and other stakeholders worldwide.”

“Much of our attention focuses on the intersection of corporate reporting and corporate governance, including responsibility related to sustainability-related disclosure. As most boards around the world have at least one professional accountant board member, there is a great opportunity for the accountancy profession to influence sustainable governance practices in board rooms,” she explained.

After general comments on the new aspects of the “Sustainability and Resilience” chapter, panelists shared practical perspectives in implementing some of these requirements—such as data and materiality. The discussion then focused on two main angles: board responsibilities and liabilities, and remuneration, including the use of sustainability indicators in executive remuneration.

 

Sustainability and Resilience

AFEP’s Odile de Brosses said: “The revision of the Principles tackles the right issues: the digitalization of company law, corporate governance codes and having a flexible approach.”

Odile de Brosses on Zoom

“The new OECD principles focus on sustainability disclosure and quality information. Just like the EU directive and ESRS standards, they aim at enhancing the reliability, accessibility and relevance of ESG information. However, it should be kept in mind that it is a huge challenge for companies to identify and address risks and impacts downstream and upstream in their value chains, according to the double materiality principle. The materiality assessment is an immensely difficult task,” she stressed.

Capital Advantage ‘s Sharon Ditchburn noted: “One of the new principles’ comforting elements is that they're agnostic in terms of materiality standards and frameworks to use. And this is particularly important in places like Africa or the Middle East, where there is a large diversity in terms of adoption of the different sustainability frameworks.”

“Connectivity is key when talking to boards. It will take time for the principles to seep into the law and codes. That’s why companies' behaviours are so important--they need to show how motivated they are by voluntarily applying them. Which also means understanding the compatibility between OECD and other standards,” she added.

Boards' Responsibilities, Liabilities and Safe Harbors

Pascal Durand Barthez on Zoom

ecoDa’s Advocacy Committee Chair Pascal Durand Barthez, said: “The new principles reaffirm the importance of the role of the Board of directors and the place of independent directors. That's not new. But it’s been complemented by useful clarifications on the role of directors, especially regarding their duty to consider the interests of their stakeholders, and not only of their shareholders. Another significant clarification relates to the accountability of directors, including their legal liability.”

Paul Lee on Zoom

“It is highly important to understand the difference between the liability and responsibility of the executive director and of the non-executive directors,” he insisted.

Redington’s Paul Lee, added: “The key shift in the in the new OECD principles is a shift from looking just inwards at the corporation, to looking outwards, looking at stakeholders, at sustainability issues, at the roles and responsibilities of investors.”

Alejandro Machionna on Zoom

“The OECD Principles ask for better standards not only for companies but for investors and stakeholders, which is a powerful message,” he noted.

IGEP Argentina Alejandro Marchionna Faré said,  “The OECD principles are fantastic and I hope that when Argentina resumes the process to join the group, it will heavily influence legislation. At the moment, a director in Argentina is on parole, they have lots of obligations and liabilities.”

“Board members and management have to be protected from litigation and frivolous lawsuits. In France, the business judgement does not exist as such, but possibilities for third parties to trigger legal actions against directors are restricted”, highlighted Odile de Brosses.

Remuneration and the Use of Sustainability Indicators

Sharon Ditchburn on Zoom

Panelists reflected on linking remuneration and sustainability and the key principles to consider when selecting the right metrics.

For Pascal Durand Barthez, “As far as the executive directors are concerned, there is no doubt that putting non-financial criteria in their variable remuneration makes sense. If you want to walk the talk and make sure you’re going from words to action, it is indispensable.”

“The key is to really focus on outcomes-based performance indicators. They need to be relevant, and to be supported by stakeholders as well”, added Sharon Ditchburn.

Watch the Key Recommendations from Our Speakers

Beatrice Richez-Baum
Beatrice Richez-Baum

Director General

Dr. Béatrice Richez-Baum is a Doctor in Law specialized in European Law. Additionally, she followed the training of the Paris Bar School. Having completed her PhD thesis on international Trade and European Law in 1999, she started her career as a legal expert for the Paris Chamber of Commerce and Industry after a few experiences in Brussels including the Council of Bars and Law Societies of Europe and the European Economic and Social Committee. At the creation of the European Confederation of Directors Associations (ecoDa), Dr. Béatrice Richez-Baum was appointed as Secretary General and began her Director General mandate in September 2017. She has been able to raise ecoDa’s profile by advocating the interests of European board members, and by developing close working relationships with the EU institutions and European peer organisations.

Hiroki Waki
Hiroki Waki

Hiroki Waki is on secondment from Sompo Japan Insurance Inc., where he has worked for 23 years. He contributes to Business at OECD’s work on Economic Policy and Finance, Corporate Governance, Employment, Labor, and Social Affairs, Insurance and Private Pensions, as well as our work on South East Asia and B20. Prior to joining Business at OECD, he worked as a Director at PT Sompo Insurance Indonesia, a subsidiary of Sompo Japan, based in Jakarta, where he was in charge of corporate strategy development, business planning, and ERM advancement.Hiroki holds a Bachelor’s Degree in Commerce and Management from Hitotsubashi University, Tokyo, and is fluent in Japanese, English, and Indonesian.

Cecile Bonino
Cecile Bonino

Principal, Global Engagement

Cecile Bonino is Principal of Global Engagement for IFAC. She bridges global organizations' relationship management, policy support, event management, and brand awareness. A lawyer by education, Cecile has 20 years of experience in public affairs and public relations. Before joining IFAC, Cecile worked for 13 years at ACCA, where she headed EU Affairs and the ACCA Brussels office, working with European decision and policymakers, Media and key influencers, as well as global organizations. Prior to this, Cécile worked as a consultant in financial services, energy, environment, and climate change at Weber Shandwick and as Environment and Legal Affairs adviser at the European Landowners Organisation. At the beginning of her career, Cécile also worked at the DG TRADE of the European Commission, the DG Development of the College of Europe, and the law firm, Gide Loyrette Nouel. In 2012, Cécile won the ‘Public Affairs Professional of the Year’ prize at the European Public Affairs Awards.

Laura Takamizawa
Laura Takamizawa

Principal, IFAC

Laura Takamizawa is a Principal in IFAC's thought leadership team, focusing on initiatives in support of finance and accounting professionals working in business and the public sector. She was previously an Audit Manager at Grant Thornton, specializing in public sector audit in the UK, and prior to that worked for the Audit Commission. She also spent a year on secondment to the International Integrated Reporting Council (IIRC), where she was responsible for managing their public sector and business network programs.

Laura is a member of the Chartered Institute of Public Finance and Accountancy (CIPFA), and holds a Bachelor of Science (Hons) degree in Mathematical Physics from the University of Nottingham (UK).