The future of corporate governance in the EU was under discussion at a recent event in Brussels, with most delegates saying there was no current need for a pan-European code.
Jean-Yves Muylle of the European Commission’s DG Internal Market made the views of the commission perfectly clear. As he told the meeting: “The commission does not intend to implement a European corporate governance code.”
He continued: “There is not a single solution at the EU level for corporate governance.” But he said there were some areas, such as executive remuneration, where there were “a number of identified areas where EU intervention is necessary”.
And Muylle said that despite extensive consultation, some groups – such as labour unions – had not made their views known to the EC. “We in the commission don’t know the views of these other stakeholders,” he said.
The conference – ‘Corporate governance in the European Union: challenges for national organisations and European policy makers’ was co-organised by the VB, the Dutch industry-wide pension association, the European Federation for Retirement Provision and the AEIP, the European Association of Paritarian Institutions.
Jean-Louis Faure, general manager of CTIP, France’s Centre Technique des Institutions de Prévoyance, said: “Concerning investors, searching good governance is of utmost importance, as this is an instrument to ensure that the company or the investments are well managed. It facilitates the evaluation of the development perspectives and offers a better appreciation of the risks run by the company on all its activities.”
He added: “Quality and reliability of financial information must contribution to improving the image of listed companies and to reinforce mutual confidence between companies and investors.”
Besides the transformation of accounting and finance standards, the relations between companies and shareholders develop within a new legal framework that aims at redefining the role and responsibilities of board members, and the functioning of management boards and AGMs.
Pierre Bollon, vice-chairman of Paris-based Observatoire sur la Responsabilité Sociétale des Entreprises, pinpointed what he sees as the role of governance. “Corporate governance is at the heart of wealth creation,” he said. But he added that shareholders had to exercise ownership, or risk losing it. “Voting is really part of the fiduciary duty of the manager,” he said, adding that if managers don’t exercise their voting rights then “that right is lost”.
He said: “If it’s costly to vote we’d rather not vote.” He called for lower voting costs – and said banks’ current system is “antique”. “Our fight is with the banks,” he said, adding that there was not enough academic research into these topics. “We should be looking at all buy-side issues.”
But Matti Leppala, director of international and legal affairs in the Finnish Pension Alliance, Tela, queried the priority given to governance issues. “High returns are more important than other issues,” he said. “Pension funds should look at the financial issues first.” He explained that the Finnish pension alliance had its own five-page principle of ownership policy. “We would be in favour of self-regulation,” he said.
Jos van Niekerk, director of Dutch corporate governance foundation SCGOP, added his voice to the call for self-regulation. “Market forces will probably be enough,” he said.
Derek Scott of the UK’s National Association of Pension Funds differed slightly, saying that self-regulation did not always work but that any regulation should have a “light touch”.
A different note was struck by Dutch MEP Ieke van den Burg. She laid down a challenge to current perceptions of governance. She said the Commission’s DG Market was “shortsighted” and called for a more “holistic” approach to governance, saying that it needed to be looked at in the context of the global economy. Van den Burg said there was a “lack of serious debate” about the issues involved.
She said that corporate governance is much more complex and even challenged the idea of shareholders as purely owners, bringing into the area the idea that they are the “perfect vehicle for the social voice”. Part of this process was for corporate governance and corporate social responsibility to become “more integrated”.
EFRP vice-chairman Peter Lindblad said: “I think you can make a case for some mandatory codes. It may be the only way to make progress is to have mandatory regulation. But he added that there were “limits to what you can achieve with regulations”.
Perhaps the last word on the topic should go to Peter Kraneveld, special advisor at Dutch health care fund PGGM. In response to a question from the floor, he summed the situation up, saying: “Corporate governance gives us a better return, which makes our clients happy.”

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