Key Governance Developments - October 2022

Discover our latest Key Governance Developments

Key Governance Developments

European Court of Justice may have to rule on competition guidelines affecting companies’ climate agreements

European Commission guidelines on anti-competitive sustainability agreements between companies to lower their carbon emissions are too restrictive, according to Martijn Snoep, chairman of the Dutch Authority for Consumers and Markets. He says businesses may need to challenge the guidelines before the European Court of Justice, or otherwise they and their boards of directors could face liability for harming consumers through higher prices or lower quality goods and services. The EU guidelines provide some safe harbour protection, Snoep argues, but they are too rigid and could result in regulatory penalties or prosecution if companies conclude agreements to reduce emissions, packaging or the use of toxic chemicals.

Best source:  Financial Times (subscription required)

Shell CEO calls for UK to tax excess energy group profits to ease impact on households
Shell CEO Ben van Beurden says the UK government should impose a windfall tax on the excess profits of oil and gas companies to help protect households from higher energy costs, something Liz Truss's administration has so far refused to do. Van Beurden says a significant proportion of society will be at risk because the British government has chosen to fund a cap on prices through borrowing rather than an extra tax on profit, as in the EU. Hargreaves Lansdown senior investment analyst Susannah Streeter says the statement reflects Shell’s efforts to improve its ESG credentials, particularly its reputation for supporting social justice.

Best source: Sky News

UK supermarket group links executive pay to sustainability targets
The board of Tesco, the UK’s largest supermarket chain, has linked executive remuneration within the group to sustainability goals, including the halving of food waste in its operations by 2025. Other targets, including increased gender and ethnicity representation as well as carbon emission reductions, will determine 25% of the company’s executive performance share plan.

Best source: Retail Gazette

Trial of Swedbank’s former CEO Bonnesen over Estonia money laundering denial begins in Sweden
The trial of former Swedbank CEO Birgitte Bonnesen for denying the bank’s involvement in suspected money laundering transactions in Estonia has begun in Stockholm and is expected to last eight weeks. Bonnesen is accused of fraud for repeatedly providing misleading information to cover up deficiencies in AML controls at the group's branch in Tallinn that eventually led to Swedbank being fined a record SEK4bn in 2020. Bonnesen, who was CEO between 2016 and 2019, is facing up to six years in prison if convicted.

Best source: Reuters (free registration)

Many companies that own German real estate are foreign and do not identify ultimate owners
An estimated 20% of the companies registered as owning real estate in Germany do not identify their beneficial owners, according to data from the federal states of North Rhine-Westphalia, Lower Saxony, Saarland, Thuringia and Saxony. Many entities that hold real estate are themselves owned by companies in traditional offshore jurisdictions such as Cyprus, Switzerland or the Cayman Islands, prompting concern about tax avoidance or evasion, or money laundering. The proportion of foreign company ownership is as high as 50% in cities such as Dresden, Erfurt and Essen. To deal with the opacity problem, the government is planning to link the land registry’s database with its recently-enhanced transparency register, as well as outlawing cash purchases.

Best source: Welt am Sonntag (in German)

The future reforms covering the insurance sector