Monster macht

In Brussels, they are scratching their heads over the failure of numerous states to implement the mighty Corporate Sustainability Reporting Directive (CSRD) in time. Though, according to Kolja Stehl, a legal eagle at law firm Görg writing for the Oxford University business law blog, the problem runs deeper than a lackadaisical attitude to schedule keeping.

So far, 16 EU member states, including Germany, face “infringement procedures” for missing the key 6 July 2024 transposition deadline.

Stehl reports that despite much wrangling over the CSRD to get it passed into European law, German law makers are still less than impressed. Members of the Bundesrat have “urged” Germany’s federal government to, in turn, urge the European Commission to “significantly cut it back”; a justice minister has called for a renegotiation; another senior figure labelled it a “bureaucratic monster”.

Germany is also wrestling to work out how its own supply chain due diligence law sits alongside the EU’s CSDDD (Corporate Sustainability Due Diligence Directive).

There are rumblings, Stehl reports, that senior European officials would like to revisit the entire CSRD and CSDDD edifice to address a commitment from Commission president Ursula von der Leyen to cut reporting burdens (a theme, by the way, echoed in London but relating to other matters).

Stehl observes: “Growing pressure to cut red tape from within the member states, couple with targeted anti-ESG initiatives and continued criticisms from the US, will be among the factors that play into the controversies surround a potential review of CSRD and CSDDD.” German politicians clearly now think they married a monster when they tied the knot with CSRD.

Trading places

Whatever the criticism of ESG, there’s no doubt the term still has an impact. KPMG reports this week that four out of five “dealmakers” say ESG considerations are “on their ESG agenda”.

The firm finds 45% of 600 M&A specialists around the world say they have found “significant” deal implications, as a result of undertaking ESG due diligence when working on a deal.

But get this: 55% of those who responded to the survey say they are “willing to pay a premium” of 1 to 10% for assets with “high ESG maturity”. ESG as a concept may have taken a battering in recent times but it still makes a difference to the cost of deals. Looks like ESG won’t be trading places for other concepts any time soon.

The color purple

Corporate America’s political colour is “purple”. That’s according to the latest research from Columbia Law school boffin Reilly S. Steel who tracked the political leanings of corporate leaders.

In an article for the Oxford University Business Law blog, published just days before the imminent US presidential election, Reilly writes “executive ideology” has been tending towards the “liberal” end of the political spectrum.

“Consistent with popular narratives in certain quarters, the average ideology of the people who run America’s largest companies has become considerably more liberal.

“Contrary to the perception that the left has taken over big business, however, conservatives still remain common in the ranks of corporate elites.

“Corporate America is thus neither red nor blue; it is purple.”

It’s lonely at the top

A warning from the US for non-execs feeling their new best friend might be one of their executive directors: don’t.

Lawyer Michael Peregrine, writing for Forbes, says a recent ruling imposing a six-figure penalty on a director for failing to make disclosures that would have revealed he “likely wasn’t all that independent”, due to a close personal relationship with a high ranking executive.

Peregrine, a partner at McDermott Will & Emery, writes that the subject raises a whole debate about what constitutes “social independence” for board directors. So threatening is the issue that Peregrine sees a lonely time ahead for some senior managers.

“Perhaps the days of directors being ‘beer buddies’ with the CEO or CFO may become a thing of the past,” he writes.

“And the COO and the general counsel might see a decline in the number of dinner invitations they receive from board members. This could get a bit out of control for a while.” Some boardroom members may have to rediscover the perks of being a wallflower.