Where angels fear to tread

The European Commission is under further pressure for its decision to push ahead with its review of key sustainability reporting laws without going through the usual steps.

The European Ombudswoman Teresa Anjinho has asked the Commission to provide “detailed explanations” of why a series of “procedural steps” were ignored as part of the omnibus review of sustainability reporting and human rights due diligence laws.

Anjinho seems most vexed about why the Commission seems to have ignored the need for an impact assessment.

A statement from Anjinho’s office says: “The Ombudswoman asked the Commission to elaborate on its reasoning for the ‘critical urgency’ of the proposal.” It points out that ignoring the procedures “must be thoroughly justified and well explained”.

None of this means the Commission doesn’t have good reasons, but Anjinho may not be receiving a postcard from Ursula von der Leyen on holiday this summer.

Questions raised

We are currently glued to articles by Sophie Robinson-Tillett, a senior associate at the University of Oxford and a writer on sustainable finance.

In a piece about shareholder engagement, Robinson-Tillet highlights the biggest “grumble” of company boards.

“One senior executive at a listed company, who spoke on the condition of anonymity, said the questions she received from stewardship teams were often ‘lazy’, ‘unreasonable’ and ‘asked by people who don’t take any time to understand the business’.”

Which is possibly valid. Then again, yours truly was always taught: “There’s no such thing as a stupid question.” So, there’s that.

Audit fallout

Spare a thought for Erica Williams, head of the US’s audit regulator, the Public Company Accounting Oversight Board, after she lost her job this week.

Williams may have thought accounting and audit were relatively apolitical disciplines, but in the world of Donald Trump and MAGA, they are not.

This week, Securities and Exchange Commission chief Paul Atkins asked Williams to resign.

As the Financial Times reports, it seems tough new audit standards and record fines for shoddy audit work is not a CV highlight anymore for the Trump regime. Plus, many Republicans want to see the board abolished.

Expect an overhaul of the board—and possibly US audit—any time soon.

Right behind you

Lastly, while the European Commission grapples with the practicalities of sustainability reporting, some are still considering the fundamentals of businesses becoming involved in human rights.

Stephen Park, a legal prof in Connecticut, has a warning about human rights due diligence (HRDD) as it evolves into a “compliance” issue. The process he says is “vulnerable to political polarisation and ideological division”. Compliance could be “undercut” by difference in “cultural values”.

However, there is some optimism. “Conversely, if compliance professionals perceive human rights as an ethical imperative and are able to inculcate these values across the firm, companies will be more likely to conduct HRDD in a manner that advances corporate respect for human rights.”

Here at Board Agenda, we suspect that also means leaders have got to get behind the message. Where the boardroom leads, the staff should follow.