Faced with issues related, in particular, to the climate and environmental protection, certain subjects have imposed themselves within the decision-making bodies of companies. O Finance notes a rise in power of CSR. Those who hesitate to invest in these sites will not be able to hide for long since the pressure will mount over the years. It will come from public authorities, regulators but also from all stakeholders.
Since the Coronavirus crisis, the directors of publicly traded companies meet more often and discuss much more varied subjects. Almost half of issuers held one to five meetings in 2021 compared to 33% in 2020, notes O Finance in its Panorama on governance practices. Faced with issues related to the climate, environmental protection, diversity and working conditions, certain subjects have emerged within the decision-making bodies of these companies. The consulting firm notes a rise in power of CSR in governance bodies.
“The establishment of CSR committees appears to be a lever favoring the integration of this theme at the level of corporate strategy. It should be accompanied by a reflection on the methods of interaction with other committees on common and cross-cutting themes”. So far, 25% of issuers have set up a CSR committee, and the subject is at the heart of board discussions in 80% of publicly traded companies. On the stock market, ten companies represented in the ESG index stand out.
They are assessed on the basis of 38 criteria and more than 330 indicators of environmental responsibility and social and societal governance. The assessment takes into account the relevance of the commitments of these companies, the effectiveness of their managerial systems and their ability to control risks and improve their performance.
“The more cosmetic CSR is, the more the ESG report will be of lesser quality”
For the past two years, public companies have been required to publish an ESG report. Despite the improvements, the potential for progress is immense. Clearly, some companies are more engaged than others. Admittedly, there are constraints linked, in particular, to the collection of data internally and from partners. However, many issuers have managed to overcome these obstacles.
“Many were not prepared for this exercise but several of them structured themselves followingwards”, notes Omar Amine, founding partner of O Finance.
On the other hand, faced with the reluctance of certain leaders, a lot of pedagogy will be needed. Some would even consider taking their company off the stock exchange so as not to have to comply with the new requirements. This attitude is especially observed in structures where the shareholding is concentrated in the hands of a single person, often the founder. “The more a company’s capital is fragmented, the more it will improve its financial and extra-financial communication, its relationship with shareholders…”, notes Omar Amine. Several companies, even large ones, are content with the bare minimum when it comes to societal and environmental issues.
“The more cosmetic CSR is, the lower the quality of the ESG report. We see governance as a starting point. If there is strategic awareness at board level, it will result in a good extra-financial report.
There is a need to hold companies accountable. For this, they must be accountable, and this notably involves the certification of the extra-financial report, ”says the manager. Anyway, those who hesitate to invest in these sites will not be able to hide for long since the pressure will increase over the years. It will come not only from public authorities and regulators but also from all of the company’s stakeholders. The latter are indeed pushing them to be more transparent regarding their ESG practices, and they must respond to them.
Franck Fagnon / ECO Inspirations
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