Flaws in the laws?

We’re never very far from a story about the EU’s efforts to reform green reporting and due diligence rules as part of the so-called “omnibus” process.

The US, as you will read elsewhere on Board Agenda, is not happy about the extra-territorial effects of the legislation—the CSDDD and CSRD; and academics have now concluded the accelerated process in Brussels was probably flawed.

Dutch academic Jeroen Koomans used “document analysis” to conclude that when the sustainability reporting rules and human rights due diligence were being considered, the EU failed to “substantively” address concerns raised by stakeholders. A bit of an issue when the EU was supposed to be using “evidence-based policymaking, consultations and impact assessments”.

And this means the “legitimacy” of EU lawmaking now rests under a cloud because “where feedback supported the proposed legislation, it was noted in detail, whereas critical feedback received no comparable treatment”. That’s all gone well then.

Target practice

US academics Carliss Chatman and Sergio Alberto Gramitto Ricci are also concerned about governance—especially the question of whether it should address stakeholder concerns, or the priorities of capital.

Their real worry is what it said about governance when big corporates, such as retail giant Target, retreated from stakeholder-focused policies such as DEI programmes.

They have this damning comment: “Target’s silent retreat is the paradigm case, but it is not an outlier.

“It is the predictable output of a governance system built around quarterly reporting cycles, management discretion, and a doctrinal architecture that treats stakeholder interests as optional.” We can feel the Target board wincing from here.

Risky business

Over at The Times, they’re asking why boards “keep giving misbehaving CEOs second chances?”

That’s the headline on a feature penned by Wall Street Journal writers Chip Cutter and Lauren Weber, after it was noted some CEOs get fired, rehired and then fired again for similar misdeeds.

Anyway, they include this insight from Janine Yancey, an employment lawyer with Emtrain: boards “don’t act based on behaviours. They act when those behaviours create enterprise risk for the business.” Which does make you wonder just what some boards are willing to ignore.