Investors and other stakeholders are attaching more and more value to social and environmental aspects and using their influence to make sure that companies take these aspects into account. Companies must therefore structure their corporate governance and decision-making processes in such a way that they can meet this expectation. Due to the increasing importance of non-financial reporting, companies are also required to create transparency with respect to environmental, social and governance aspects.
The quality of corporate governance has long been a key factor for investors. For example, questions on compliance or the staffing of corporate bodies are regularly addressed in shareholders’ meetings or investor discussions. It is increasingly the case that investors are also taking social and environmental aspects into account when deciding in which companies to invest and how to exert their influence. This can be seen, for example, in the recommendations of proxy advisors who only support the formal approval of board members, consent to the remuneration system for board members or the election of supervisory board members if the company considers certain social or ecological factors.
If the company's corporate bodies fall short of the shareholders’ demands, there is a risk of consequences, for example in the form of low approval ratings for general meeting or shareholder resolutions or even avoidance or nullity actions against resolutions.
Gleiss Lutz is among the leading law firms when it comes to advising on corporate governance issues, business judgement decisions, the structuring of management board remuneration systems and providing support at general- and shareholders' meetings. In particular, we also assist our clients with giving appropriate consideration to ESG aspects and, in so doing, meeting the investors’ demands and avoiding liability risks.
Since the implementation of the CSR Directive into German law in 2017, large capital market-oriented companies are also obliged to report on environmental, employee and social matters as well as on adherence to human rights standards and the fight against corruption and bribery. Since then, the obligations with respect to non-financial reporting have been increasingly expanded and tightened, for example by means of the EU Taxonomy Regulation, the planned new CSR Directive and the reporting obligations in the Act on Corporate Due Diligence in Supply Chains (Lieferkettensorgfaltspflichtengesetz). We monitor and analyse the activities of the European and national legislator and advise on the statutory requirements and standards for non-financial reporting.