Eurosif Annual Event
Update For Member Affiliates
François Passant
October 2014, Brussels
For internal use only
Past Year In Review
1 major policy “win”
1 major policy milestone
1 major deliverable – SRI Study
New Communication tools / approach
For internal use only
EU Policy – Overview of Progress
Promoting sustainability through financial markets
Major Win
Some Progress
Corporate Transparency
(non-financial disclosure)
Investor Transparency /
ESG Disclosure
Some Progress
Major Milestone
SRI and Long Term
Investing / Sustainable
Growth
Corporate Governance /
Shareholder Rights
For internal use only
Major Win: Non-financial reporting
2009-2011
2011-2012
2013-2014
Before Proposal
Work on Proposal
Co-legislators
European Commission
European Commission
Stakeholder
European Parliament
European Council (+RPs)
• Meetings with EC
• Participations to
workshops
• Position papers
• Participation to Expert
Groups,
• Meetings
• Policy events
•
•
•
•
•
•
Policy events
Alliances
Press Releases
Amendments
Meetings with MEPs/RPs
Letters Coreper / JURI
The European Council adopted the
Directive on non-financial information
on September 29, 2014.
For internal use only
Example of Suggested Amendments Retained
Compromise text February 2014
1.
Article 19a
Non-financial statement
… shall also include in the management report a non-financial statement containing
information relevant to the extent necessary for an understanding of the undertaking's
development, performance, position and impact of its activity, relating to, as a minimum,
at least environmental, social and employee matters, respect for human rights, anti-corruption
and bribery matters, including:
…
(a)
a description of the policy pursued by the undertaking in relation to these matters ,
including due diligence processes implemented;
Where the undertaking does not pursue policies in relation to one or more of these matters, the
review non-financial statement shall provide an a clear and reasoned explanation for not doing
so.
For internal use only
The Result
Companies
concerned will
include a nonfinancial
statement in
their
management
report
The
Directive
amends the
Accounting
Directive
Comply or
Explain
approach:
Where a
company does
not pursue
policies, it shall
provide an
explanation
European Parliament adopts the Directive: April 2014
European Council adopts the Directive: September 29, 2014
First reports: early 2018 (for 2017)
July 2018: review (CBCTR)
For internal use only
Non-financial and Diversity Information Disclosure –
Summary Of Compromise Text Details
Main Features
Text Details
Scope
Large, “public-interest” entities with over 500 employees
~ 6000 companies
Nature of
Obligation
Mandatory Comply or Explain (“clear and reasoned”)
Nature of Info.
Policies + their outcome
Risks + how they are managed
“ESG” domains
Environment; Social, Human Rights/Bribery/Corruption,
Diversity
Liability
Directors are liable for the information provided (but no
mandatory assurance & no mention of shareholder vote)
Key Performance
Indicators (KPIs)
Relevant non-financial KPIs
International
Frameworks
Member States to allow companies to rely on national, EU or
international frameworks ; must specify which ones utilised
For internal use only
Conclusion: The Journey Continues
SCOPE
Large “public interest
enterprises”. Will only
cover about 6,000
(primarily listed)
companies (significantly
less than the 18,000 listed
and non-listed companies
that the Commission’s
original proposal was
intended to cover)
TIMING
Allows companies (under
certain circumstances) to
delay the publication of
the disclosure of nonfinancial information by up
to 6 months following the
financial data for the same
time period
KPIS
Does not prescribe the
use of specific key
performance indicators
(KPIs), which would allow
investors to compare
companies more easily
ASSURANCE
Does not contain any meaningful assurance measures
GUIDANCE (within 24 months)
Stakeholder Group + Need consistent application at Member State level
Country-by-country tax reporting (July 20118)
Commission shall issue report on the possibility of introducing an obligation requiring
large undertakings to produce annual report on taxes paid
For internal use only
Major Milestone: Proposal Shareholder Rights
Directive II
06/2007
Current SRD
adopted
2012
Corporate
Governance
Action Plan
APR. 2014
SRD
Proposal
published
Discussions btw.
Co-legislators
2014-2015
2011
Green Paper on
Corporate
Governance
2013
Consultation
on Best
Practice
Principles for
Governance
Research
Providers
Fall 2014
EP Rapporteur
named
For internal use only
Overarching Objective(s) of Proposal SRD II
1. To contribute to the long-term sustainability of EU
companies;
2. To create an attractive environment for shareholders and to
enhance cross-border voting
3. By improving the efficiency of the equity investment chain in
order to contribute to growth, jobs creation and EU



competitiveness.
 It also delivers on the commitment of the renewed strategy on
the long-term financing of the European economy
 It contributes to a more long-term perspective of shareholders
which ensures better operating conditions for listed companies.


For internal use only
Specific Objective(s) of Proposal SRD II
1. Increase the level and quality of engagement of asset owners
and asset managers with their investee companies;
2. Create a better link between pay and performance of
company directors;
3. Enhance transparency and shareholder oversight on related
party transactions;
4. Ensure reliability and quality of advice of proxy advisors;
5. Facilitate transmission of cross-border information (including
voting) across the investment chain in particular through





shareholder identification.
For internal use only
Overview - Proposal Shareholder Rights Directive II
Chapter 1A
•
Provisions facilitating the exercise of shareholder rights, more specifically, those
pertaining to the roles and responsibilities of intermediaries in the voting chain, as well as
to transparency regarding securities lending policies and costs.
Article 3a
Article 3b
Article 3c
Article 3d
Identification
Information
Facilitation
Transparency
Chapter 1B
•
•
A “comply or explain” requirement for asset owners and asset managers to develop and
publicly disclose engagement and voting policies.
The recognition of the importance of monitoring the non-financial performance of investee
companies as part of a shareholder engagement policy.
Article 3f
Article 3g
Article 3h
Article 3i
Engagement
Invest. Strategy
AM Transparency
Proxy Advisors
For internal use only
Overview - Proposal Shareholder Rights Directive II
Chapter 1B
•
•
Requirements for companies to be more transparent regarding director remuneration
policies, in particular with regard to how remuneration takes into account companies’ longterm interests and non-financial performance.
The ability of shareholders to have the opportunity to vote on the remuneration policies
and reports of the companies in which they are invested and on certain RPTs.
Article 9a
Vote on Remu. Policy
Article 9b
Article 9c
Vote on Remu. Report
Vote on RPT
For internal use only
Assessment - Proposal Shareholder Rights Directive II
• Overall very positive
• Some longstanding claims by Eurosif
• Eurosif supports the Proposal in general
• Some concerns:
• Need complementary measures fixing x-border voting issues
• Some of the detailed disclosure requirements of Articles 3g and 3h
appear unnecessary
• Potential cost effects of the Proposal on market participants should be
carefully ring-fenced.
• Next steps:
• Approach Rapporteur & JURI Committee Members (EP)
• Approach Perm Reps + Presidency
• Policy Events
For internal use only
Engaging Member + Affiliates in Policy Work
Policy Webinars
• December 2013
• March 2014
Face-to-face meetings SRD II
• May – London
• July – Paris
Policy Groups
• Consultation Best Practice Principles
• Shareholder Rights
• “Manifesto”
• Conflict Minerals
SIFs
• FNG: Position paper on NFR
• FFS: Joint letter to Minister
• Consultation on SRI Definition
For internal use only
SRI Study – 6th Edition
•
•
Focus Groups
•
December
•
February
Innovations
•
More details on Exclusions
•
More details on Integration
•
More details on Bonds
•
More details on Impact Investing
For internal use only
Eurosif New Website
Key Benefits
• Better alignment with Eurosif focus (e.g. Policy)
• Enhanced user navigation
• Increased visibility of Transparency Code
• Social media embedded
www.eurosif.org
For internal use only
Future Activities
Refreshed Policy Agenda
Select Studies
Structured Member Engagement
Stakeholder Management
For internal use only
Eurosif SRI Agenda for European Policy-makers
Retail
Institutional
“Promoting sustainability through financial markets”
Enabling the growth of the market
Facilitating the work of the industry
1. Foster greater incorporation of nonfinancial aspects into institutional
investors’ investment decisions
4. Progress relevant corporate
transparency
2. Promote active and long term shareownership
Remove barriers to shareholder
engagement and the exercise of
voting rights
3. Foster transparency, accountability
to and awareness of individual
investors
For internal use only
Eurosif SRI Agenda for European Policy-makers
1
Foster greater incorporation
of non-financial aspects into
institutional investors’
investment decisions
•
•
•
•
•
Promote active and long term
share-ownership
• Progress the Proposal for a revised Shareholder
Rights Directive (see detailed position paper)
• Allow shareholders to keep control of their rights
at all times;
• Ensure smooth and cost-efficient exercise of
intra-European cross-border voting rights
Foster transparency,
accountability to and
awareness of individual
investors
• Support initiatives aiming at growing the
recognition by the retail market of the merits of SRI
• Introduce more transparency for all investment
products
• Ensure that pension reporting to beneficiaries
incorporates ESG information
• Ensure more proactive role by distributors / IFAs
2
3
Levy ambiguity around Fiduciary duty
Pension Directive and non-financial (ESG) risks
Promote SRI with public institutional investors
Mandatory Statement of Investment Principles
Role and responsibility of investment consultants
For internal use only
Structured Member Affiliate Engagement
The vision:
Ad-hoc
working groups
A few permanent thematic
taskforces/working groups
•
•
•
•
•
•
•
Designated Chair
Accountable for delivery
Supported by Secretariat
Voluntary participation but
selection criteria
Quarterly calls / meetings
+ ad-hoc
•
•
•
•
According to need / policy
agenda
Focus on one specific
topic
Can provide expert input
to permanent WG
Can be chaired by
Secretariat
Input :
Policy agenda ( validation by Board)
Policy positions ( validation by Board)
© Eurosif, 2014
For internal use only
Select Studies
Prerequisites: aligns with Eurosif policy objectives + can be self-funded
Ideas:
EU Pension Funds
Policy Theme: ESG
& Asset Owners
Investment
Consultants
Policy Theme:
Consultants
Retail market
surveys
Coordinate national
surveys
For internal use only
Stakeholder Management
Investor-driven
platforms
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•
•
•
•
•
•
EFAMA
PensionsEurope
PRI
CDP/CDSB
IIGCC
GSIA
…
Theme-driven
• Climate: CDP,
2degree, IIGCC…
• NFR: IIRC, FEE,
ACCA, ECCJ, …
• Corp. Governance:
Eumedion, Ecoda,
…
Globe EU
(EP)
Capital
Stewardship
Initiative
For internal use only
Questions
© Eurosif, 2014