- ESG stands for environmental factors, corporate social responsibility and corporate governance, which aims to ensure that a company is managed responsibly, transparently and in line with the interests of all stakeholders,
- The ESG reporting regulations will come into force this year. While they apply to large public interest entities (e.g. banks) for now, small and medium-sized companies will have to report ESG data from 2027,
- Corporate governance issues include the qualifications, role and tenure of the board of directors, as well as diversity, ethical behaviour, communication with stakeholders and transparent remuneration,
- Taking ESG strategy into account can be good for investor relations, brand image and improving working conditions, which translates into better financial results,
- Even if your company is not yet subject to ESG reporting, it is worth introducing it alongside corporate governance elements. This will give you a competitive advantage.
More details below.
Already this year, large companies covered by the NFRD (Non-Financial Reporting Directive) will be covered by the ESG Reporting obligation and each year it will affect more companies. ESG reporting not only describes the social responsibility and environmental impact of companies, but also corporate governance activities, the “G” in ESG.
Would you like to prepare for the upcoming changes and learn more about corporate governance principles? Or do you want to cultivate relationships with all stakeholders or develop an advantage for your company now? In our article you will find all the information you need.
What is ESG?
The abbreviation ESG stands for Environment , Social , Governance and refers to a company’s performance in terms of the environment, social responsibility and corporate governance. These are standards that aim to measure a company’s impact on the aforementioned factors and underline the importance of including more than just financial results in reports.
G for corporate governance
G for Governance, which is precisely corporate management or governance, is a system of controls and procedures aimed at the proper and transparent management of a company. Corporate governance defines the governance america cell phone number list structure, shareholder rights, and ethical standards that underpin the company’s operations, making it a key element that drives all ESG initiatives .
Corporate governance is at the heart of building relationships with employees, investors or the board of directors. Maintaining a transparent system is key to building relationships and can be a competitive advantage, especially for suppliers. Companies that do not comply with corporate governance principles may be excluded from supply chains or other collaborations with counterparties that s in esg – corporate social responsibility pay attention to sustainable management issues and are willing to comply with all ESG principles. These consequences can negatively impact financial results, directly affecting credit rating and access to capital.
Maintaining high-quality corporate governance can enhance a company’s reputation, better manage risks, increase efficiency and even build relationships with a special group of customers, as well as brand . Quality corporate governance is reflected in factors such as professional management, the structure of the board of directors and management, and well-structured governance systems and processes.
What should the corporate governance report contain?
The regulations set out a series of information that a company must gambler data disclose. According to EU regulations and standards, the corporate governance report includes:
- Information about the board, such as experience, qualifications, functions (divided into executive and non-executive), competence and term of office,
- Board Remuneration Policy,
- Percentage of independent members of the Board of Directors and Supervisory Board,
- Percentage of women on management and supervisory boards,
- Information on risk management and internal control practices,
- Description of the participation and rights of shareholders, including minority shareholders
Furthermore, in addition to the applicable rules and regulations, WSE-listed companies are required to comply with the “ Code of Good Practice for WSE-Listed Companies 2021 “. This is a set of rules aimed at promoting effective governance, respect for shareholder rights and transparent communication with the market. According to the “comply or explain” principle, companies must comply with rules relating to: information policy and communication with investors, management and supervisory board, internal systems and functions, general meeting and shareholder relations, conflicts and transactions with related parties, and remuneration.
By taking the above elements into account, companies can provide stakeholders with a clear view of how corporate governance principles are integrated into their strategy, increasing trust among investors, customers and other stakeholders.
Best corporate governance practices?
The concept of corporate governance may seem incomprehensible at first, so we have prepared some practices to help you apply corporate governance principles in accordance with current recommendations.
- Regular reporting on the company’s activities, as well as a clear definition of the roles and responsibilities of management and employees.
The first element worth introducing is transparency in the company’s operation and a clear definition of the responsibilities of the various functions. Companies must regularly inform stakeholders about their activities, difficulties, risks or financial results. Publishing reports describing ESG factors helps to build trust . It is also worth adding that all reporting procedures and standards must be transparent to make them as easy to read as possible. Within the organisational structure, roles and responsibilities must be clearly defined, to ensure that decisions are made in an informed manner.