Sustainable corporate governance, stakeholder participation and human rights due diligence


There is no doubt that sustainability is today a crucial issue within the regulatory framework of the European Union. March 10e 2021, the European Parliament made public the draft directive on “Due diligence and corporate responsibility”, followed, April 21st 202, by the European Commission draft directive on “reporting on the sustainable development of companies” (another draft directive on “sustainable governance” is expected in the second quarter of 2021). These measures follow on from Directive 2014/95 “NFRD” on non-financial reporting and complete and extend the ESG regulatory framework on specific ESG topics.

While waiting for the definition of the scope, the recipients and the measures that companies will have to adopt with regard to ESG issues, it is nevertheless possible for business leaders to take into account other interests than those of shareholders to build the sustainable side of their organization. The increasingly popular “models B”(Ie B-Corps and public utility companies[1]) are an example of how stakeholderism can be integrated into corporate strategy. Indeed, sustainable and innovative companies operating in a responsible, sustainable and transparent manner vis-à-vis people, communities, territories and the environment are characterized by a lower risk level and higher long-term profitability.

This is even more evident when a “ESG Due Diligence“is carried out to monitor impacts along the value chain, as foreseen by the draft directive on” due diligence and corporate responsibility “. the adoption of policies and measures to end, prevent or mitigate related risks It is important to note that the draft directive, as well as other ongoing legislative initiatives at EU level, underline the key role of human rights which are related not only to social issues “S” (e.g. workers’ rights, religious, ethnic, sexual and gender discrimination, etc.) but also environmental problems, as understood and expressed in the right to a healthy environment and a life of dignity.

Therefore, managers of large European companies are required to fundamentally rethink the company’s strategy. Sustainability is a challenge and an opportunity that can no longer be seen as mere compliance but requires strategic choices and decisions that impact the mission, governance, organization and products. This allows companies to improve their market positioning and anticipate compliance obligations by integrating the generation of social and environmental value into their business strategy.


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