Corporate Governance
ESMA identifies and addresses developments in the area of corporate governance, including in connection to the implementation of the revised Shareholder Rights Directive and the ESG agenda, and undertakes further actions in accordance with ESMA’s responsibilities.
According to its Founding Regulation (1095/2010), ESMA may act in the field of activities of market participants, including matters of corporate governance (CG), as long as such actions are necessary to ensure the effective and consistent application of the acts under its remit, including the Transparency Directive (TD). While there is no specific CG Directive, the revised Shareholder Rights Directive (SRD2) addresses some of the main issues in this area.
ESMA performs work in connection to the implementation and review of the SRD2. In particular, ESMA's recent work has focused on the assessment of implementation of the SRD2 in two key areas i.e. proxy advisors and the investment chain. This has led to the publication of the Report on the implementation of SRD2, which will serve as basis for the upcoming work of the European Commission in assessing the implementation of the SRD2 and the potential review process of the SRD2.
ESMA’s work also concentrates on exchanging and mapping practices in other areas of the revised SRD and ESMA publishes the list of national thresholds for shareholder identification. In addition, ESMA monitors the development of ESG disclosures, including the relevant corporate governance elements, and the design of new EU conduct duties on due diligence as foreseen by the proposed Corporate Sustainability Due Diligence Directive (CSDDD).
ESMA's past work on CG has extensively covered the area of proxy advisors. Following an analysis of the relevant market, in its 2013 Final Report ESMA encouraged a market-led Code of Conduct to foster greater understanding and assurance towards proxy advisors. An industry group published the Best Practice Principles for Providers of Shareholder Voting Research and Analysis (BPP) in March 2014 and, at the end of 2015, ESMA published a Follow-up Report on the development of the Best Practice Principles.