The EU works to combine the environment and wages

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The path towards the adoption of the Corporate Sustainability Due Diligence directive has suffered a further setback. The Council of the European Union has decided to postpone the vote on the ratification of the agreement reached with the European Parliament on 14 December last year.

Directors’ remuneration is among the provisions that have met with greatest resistance from member states. In particular, the draft agreement between the Council and the European Parliament provides that larger companies are required to include adequate financial incentive mechanisms in their remuneration policies so that directors adopt and execute a transition plan towards a more sustainable economic model. . The plan must indicate, among other things, the targets linked to the mitigation of climate change and the actions that the board of directors intends to implement to achieve them.

According to the European legislator, therefore, the achievement of sustainability objectives also involves determining the criteria to which the variable component of remuneration is anchored, which therefore represents a fundamental lever for the achievement of sustainability. In this way, a functional interconnection is created between the industrial plan, the report on corporate governance, the report on the remuneration policy and the DNF (now corporate communication on sustainability).

Is the Italian legal system ready to face such a challenge?

Indeed, the art already legitimizes policies that link variable remuneration to environmental metrics. 123-ter of the Consolidated Law on Finance, in the part in which it states that the remuneration policy is an element that contributes “to the corporate strategy, to the pursuit of long-term interests and to the sustainability of the company”. Similarly, the Corporate Governance Code functionalises the remuneration policy towards the pursuit of sustainable success, also to be understood as reducing the negative impact (possibly) exerted by the company on the environment.