Divulgation

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Le conseil d’administration et l’information extra-financière : rapport de l’IFA

Excellent travail de l’Institut français des administrateurs (IFA) qui vient de publier un rapport ô combien intéressant : « Le conseil d’administration et l’information extra-financière« .

  • Pour se le procurer : ici

Résumé :

Si l’information extra-financière a connu une formidable montée en puissance, elle demeure encore en pleine évolution, avec des contours revisités, et ce, dans un contexte où les attentes en interne à l’entreprise comme de la part des parties prenantes externes vont grandissantes. L’information extra-financière s’invite désormais dans tous les aspects de la vie de l’entreprise, et touche à autant d’enjeux qui sont au cœur des missions du Conseil. Ce document synthétise les tendances qui vont structurer l’information extra-financière dans les prochaines années, et sur cette base, formule des recommandations sur les diligences clés à effectuer par le Conseil. Enfin et surtout, ce rapport affiche l’ambition et les convictions de l’IFA quant au rôle déterminant de l’administrateur en matière d’information extra-financière.

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actualités internationales Divulgation divulgation extra-financière normes de droit Responsabilité sociale des entreprises

Proposal for a Corporate Sustainability Reporting Directive (CSRD)

Le 21 avril 2021, l’Union européenne a publié une série de mesures touchant la taxonomie, le reporting extra-financier et les devoirs des investisseurs institutionnels.

Éléments essentiels :

The Commission adopted a proposal for a Corporate Sustainability Reporting Directive (CSRD), which would amend the existing reporting requirements of the NFRD. The proposal

  • extends the scope to all large companies and all companies listed on regulated markets (except listed micro-enterprises)
  • requires the audit (assurance) of reported information
  • introduces more detailed reporting requirements, and a requirement to report according to mandatory EU sustainability reporting standards
  • requires companies to digitally ‘tag’ the reported information, so it is machine readable and feeds into the European single access point envisaged in the capital markets union action plan

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actualités internationales Divulgation divulgation extra-financière Gouvernance normes de droit

Les adieux au reporting extra-financier… vraiment ?

Blogging for sustainability offre un beau billet sur la construction européenne du reporting extra-financier : « Goodbye, non-financial reporting! A first look at the EU proposal for corporate sustainability reporting » (David Monciardini et Jukka Mähönen, 26 April 2021). Les auteurs soulignent la dernière position de l’Union européenne (celle du 21 avril 2021 qui modifie le cadre réglementaire du reporting extra-financier) et explique pourquoi celle-ci est pertinente. Du mieux certes, mais encore des critiques !

Extrait :

A breakthrough in the long struggle for corporate accountability?

Compared to the NFRD, the new proposal contains several positive developments.

First, the concept of ‘non-financial reporting’, a misnomer that was widely criticised as obscure, meaningless or even misleading, has been abandoned. Finally we can talk about mandatory sustainability reporting, as it should be.

Second, the Commission is introducing sustainability reporting standards, as a common European framework to ensure comparable information. This is a major breakthrough compared to the NFRD that took a generic and principle-based approach. The proposal requires to develop both generic and sector specific mandatory sustainability reporting standards. However, the devil is in the details. The Commission foresees that the development of the new corporate sustainability standards will be undertaken by the European Financial Reporting Advisory Group (EFRAG), a private organisation dominated by the large accounting firms and industry associations. As we discuss below, the most important issue is to prevent the risks of regulatory capture and privatization of EU norms. What is a step forward, though, is the companies’ duty to report on plans to ensure the compatibility of their business models and strategies with the transition towards a zero-emissions economy in line with the Paris Agreement.

Third, the scope of the proposed CSRD is extended to include ‘all large companies’, not only ‘public interest entities’ (listed companies, banks, and insurance companies). According to the Commission, companies covered by the rules would more than triple from 11,000 to around 49,000. However, only listed small and medium-sized enterprises (SMEs) are included in the proposal. This is a major flaw in the proposal as the negative social and environmental impacts of some SMEs’ activities can be very substantial. Large subsidiaries are thereby excluded from the scope, which also is a major weakness. Besides, instead of scaling the general standards to the complexity and size of all undertakings, the Commission proposes a two-tier regime, running the risk of creating a ‘double standard’ that is less stringent for SMEs.

Fourth, of the most welcomed proposals, however, is strengthening a double materiality’ principle for standards (making it ‘enshrined’, according to the Commission), to cover not only just the risks of unsustainability to companies themselves but also the impacts of companies on society and the environment. Similarly, it is positive that the Commission maintains a multi-stakeholder approach, whereas some of the international initiatives in place privilege the information needs of capital providers over other stakeholders (e.g. IIRCCDP; and more recently the IFRS).

Fifth, a step forward is the compulsory digitalisation of corporate disclosure whereby information is ‘tagged’ according to a categorisation system that will facilitate a wider access to data.

Finally, the proposal introduces for the first time a general EU-wide audit requirement for reported sustainability information, to ensure it is accurate and reliable. However, the proposal is watered down by the introduction of a ‘limited’ assurance requirement instead of a ‘reasonable’ assurance requirement set to full audit. According to the Commission, full audit would require specific sustainability assurance standards they have not yet planned for. The Commission proposes also that the Member States allow firms other than auditors of financial information to assure sustainability information, without standardised assurance processes. Instead, the Commission could have follow on the successful experience of environmental audit schemes, such as EMAS, that employ specifically trained verifiers.

No time for another corporate reporting façade

As others have pointed out, the proposal is a long-overdue step in the right direction. Yet, the draft also has shortcomings, which will need to be remedied if genuine progress is to be made.

In terms of standard-setting governance, the draft directive specifies that standards should be developed through a multi-stakeholder process. However, we believe that such a process  requires more than symbolic trade union and civil society involvement. EFRAG shall have its own dedicated budget and staff so to ensure adequate capacity to conduct independent research. Similarly, given the differences between sustainability and financial reporting standards, EFRAG shall permanently incorporate a balanced representation of trade unions, investors, civil society and companies and their organisations, in line with a multi-stakeholder approach.

The proposal is ambiguous in relation to the role of private market-driven initiatives and interest groups. It is crucial that the standards are aligned to the sustainability principles that are written in the EU Treaties and informed by a comprehensive science-based understanding of sustainability. The announcement in January 2020 of the development of EU sustainability reporting standards has been followed by the sudden move by international accounting body the IFRS Foundation to create a global standard setting structure, focusing only on financially material climate-related disclosures.  In the months to come, we can expect enormous pressure on EU policy-makers to adopt this privatised and narrower approach, widely criticised by the academic community.

Furthermore, the proposal still represents silo thinking, separating sustainability disclosure from the need to review and reform financial accounting rules (that remain untouched). It still emphasises transparency over governance. Albeit it includes a requirement for companies to report on sustainability due diligence and actual and potential adverse impacts connected with the company’s value chain, it lacks policy coherence. The proposal’s link with DG Justice upcoming legislation on the boards’ sustainability due diligence duties later this year is still tenuous.

After decades of struggles for mandatory high-quality corporate sustainability disclosure, we cannot afford another corporate reporting façade. It is time for real progress towards corporate accountability.

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actualités internationales Divulgation Gouvernance normes de droit

Réforme allemande à venir en gouvernance

Dans Le Monde, Mme Cécile Boutelet propose une belle synthèse de réformes à venir du côté allemand suite au scandale Wirecard : « Après le scandale Wirecard, la finance allemande à la veille d’une profonde réforme » (Le Monde, 26 octobre 2020).

Extrait :

Après les révélations sur l’entreprise, qui avait manipulé son bilan, un projet de loi en discussion souhaite notamment renforcer les pouvoirs du gendarme de la Bourse allemand.

La finance allemande a-t-elle des pratiques malsaines ? Depuis la faillite au mois de juin de l’ancienne star de la finance Wirecard, après qu’elle a reconnu avoir lourdement manipulé son bilan, les révélations sur l’affaire se sont accumulées, soulignant les graves insuffisances du système de contrôle des marchés financiers outre-Rhin. Des manquements qui sont devenus un enjeu politique majeur. Sous pression, le ministre des finances, Olaf Scholz, pousse en faveur d’une réforme rapide du système. Son projet de loi, en discussion depuis mercredi 21 octobre dans les ministères, doit être voté « avant l’été », a-t-il annoncé.

Le texte, porté également par la ministre de la justice, Christine Lambrecht, révèle en creux les limites de l’approche allemande en matière de surveillance des entreprises cotées, et le tournant culturel amorcé par le scandale Wirecard. Le système reposait jusqu’ici sur la responsabilisation et la participation consensuelle des sociétés au processus de contrôle des bilans. L’examen des comptes était confié non pas à la BaFin, le gendarme allemand de la Bourse, mais à une association privée, la DPR (« organisme de contrôle des bilans »), qui disposait de très peu de moyens réels. L’affaire Wirecard a montré l’impuissance de cette approche dans le cas d’une fraude délibérément orchestrée. La future loi doit renforcer considérablement les pouvoirs de la BaFin, qui disposera d’un droit d’investigation pour examiner elle-même les bilans des entreprise

(…) Les cabinets d’audit, dont le manque de zèle à alerter sur les irrégularités de bilan a été mis au jour par le scandale, devront aussi se soumettre à une réforme. Leur mandat au service d’une même entreprise ne pourra excéder dix ans. Le projet de loi exige qu’une séparation plus nette soit faite, au sein de ces cabinets, entre leur activité d’audit et leur activité de conseil, afin d’éviter les conflits d’intérêts.

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actualités internationales Divulgation Gouvernance normes de droit Nouvelles diverses rémunération Responsabilité sociale des entreprises

Ratio d’équité : la solution ?

Bel article de Vanessa Serret et Mohamed Khemissi dans The conversation (27 juillet 2020) : « Rémunération des dirigeants : la transparence ne fait pas tout ». Cet article revient sur le ratio d’équité : non seulement son utilité, mais encore son niveau (20 ? 100 ?…)

Extrait :

Pour la première fois, les entreprises cotées doivent publier dans leurs documents d’enregistrement universel un ratio d’équité. Il s’agit d’une exigence de la loi Pacte.

Le ratio d’équité apprécie l’écart entre la rémunération de chaque dirigeant et le salaire (moyen et médian) des salariés à temps plein de son entreprise. Il est prévu un suivi de l’évolution de ce ratio au cours des cinq derniers exercices et sa mise en perspective avec la performance financière de la société. Ces comparaisons renseignent sur la dynamique du partage de la création de valeur entre le dirigeant et les salariés.

(…)

Un premier état des lieux

Sur la base des rémunérations versées en 2019 par les entreprises composant l’indice boursier du CAC 40, les patrons français ont perçu un salaire moyen de 5 millions d’euros, soit une baisse de 9,1 % par rapport à 2018.

Évolution du ratio d’équité par rapport à la rémunération moyenne (bleu) et médiane (orange) des salariés de 2015 à 2019. auteurs

Ce chiffre représente 53 fois la rémunération moyenne de leurs employés (72 fois la rémunération médiane) : un ratio acceptable, selon l’agence de conseil en vote Proxinvest. En effet, selon cette agence, et afin de garantir la cohésion sociale au sein de l’entreprise, le ratio d’équité ne doit pas dépasser 100 (par rapport à la rémunération moyenne des salariés).

Deux dirigeants s’attribuent néanmoins des rémunérations qui dépassent le maximum socialement tolérable à savoir Bernard Charlès, vice-président du conseil d’administration et directeur général de Dassault Systèmes et Paul Hudson, directeur général de Sanofi avec un ratio d’équité qui s’établit respectivement de 268 et de 107.

Notons également que pour les deux sociétés publiques appartenant à l’indice boursier du CAC 40, le ratio d’équité dépasse le plafond de 20 (35 pour Engie et 38 pour Orange) fixé par le décret n° 2012-915 du 26 juillet 2012, relatif au contrôle de l’État sur les rémunérations des dirigeants d’entreprises publiques.

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actualités internationales Divulgation divulgation extra-financière Gouvernance Normes d'encadrement normes de droit normes de marché Responsabilité sociale des entreprises

Approche juridique sur la transparence ESG

Excellente lecture ce matin de ce billet du Harvard Law School Forum on Corporate Governance : « Legal Liability for ESG Disclosures » (de Connor Kuratek, Joseph A. Hall et Betty M. Huber, 3 août 2020). Dans cette publication, vous trouverez non seulement une belle synthèse des référentiels actuels, mais aussi une réflexion sur les conséquences attachées à la mauvaise divulgation d »information.

Extrait :

3. Legal Liability Considerations

Notwithstanding the SEC’s position that it will not—at this time—mandate additional climate or ESG disclosure, companies must still be mindful of the potential legal risks and litigation costs that may be associated with making these disclosures voluntarily. Although the federal securities laws generally do not require the disclosure of ESG data except in limited instances, potential liability may arise from making ESG-related disclosures that are materially misleading or false. In addition, the anti-fraud provisions of the federal securities laws apply not only to SEC filings, but also extend to less formal communications such as citizenship reports, press releases and websites. Lastly, in addition to potential liability stemming from federal securities laws, potential liability could arise from other statutes and regulations, such as federal and state consumer protection laws.

A. Federal Securities Laws

When they arise, claims relating to a company’s ESG disclosure are generally brought under Section 11 of the Securities Act of 1933, which covers material misstatements and omissions in securities offering documents, and under Section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5, the principal anti-fraud provisions. To date, claims brought under these two provisions have been largely unsuccessful. Cases that have survived the motion to dismiss include statements relating to cybersecurity (which many commentators view as falling under the “S” or “G” of ESG), an oil company’s safety measures, mine safety and internal financial integrity controls found in the company’s sustainability report, website, SEC filings and/or investor presentations.

Interestingly, courts have also found in favor of plaintiffs alleging rule 10b-5 violations for statements made in a company’s code of conduct. Complaints, many of which have been brought in the United States District Court for the Southern District of New York, have included allegations that a company’s code of conduct falsely represented company standards or that public comments made by the company about the code misleadingly publicized the quality of ethical controls. In some circumstances, courts found that statements about or within such codes were more than merely aspirational and did not constitute inactionable puffery, including when viewed in context rather than in isolation. In late March 2020, for example, a company settled a securities class action for $240 million alleging that statements in its code of conduct and code of ethics were false or misleading. The facts of this case were unusual, but it is likely that securities plaintiffs will seek to leverage rulings from the court in that class action to pursue other cases involving code of conducts or ethics. It remains to be seen whether any of these code of conduct case holdings may in the future be extended to apply to cases alleging 10b-5 violations for statements made in a company’s ESG reports.

B. State Consumer Protection Laws

Claims under U.S. state consumer protection laws have been of limited success. Nevertheless, many cases have been appealed which has resulted in additional litigation costs in circumstances where these costs were already significant even when not appealed. Recent claims that were appealed, even if ultimately failed, and which survived the motion to dismiss stage, include claims brought under California’s consumer protection laws alleging that human right commitments on a company website imposed on such company a duty to disclose on its labels that it or its supply chain could be employing child and/or forced labor. Cases have also been dismissed for lack of causal connection between alleged violation and economic injury including a claim under California, Florida and Texas consumer protection statutes alleging that the operator of several theme parks failed to disclose material facts about its treatment of orcas. The case was appealed to the U.S. Court of Appeals for the Ninth Circuit, but was dismissed for failure to show a causal connection between the alleged violation and the plaintiffs’ economic injury.

Overall, successful litigation relating to ESG disclosures is still very much a rare occurrence. However, this does not mean that companies are therefore insulated from litigation risk. Although perhaps not ultimately successful, merely having a claim initiated against a company can have serious reputational damage and may cause a company to incur significant litigation and public relations costs. The next section outlines three key takeaways and related best practices aimed to reduce such risks.

C. Practical Recommendations

Although the above makes clear that ESG litigation to date is often unsuccessful, companies should still be wary of the significant impacts of such litigation. The following outlines some key takeaways and best practices for companies seeking to continue ESG disclosure while simultaneously limiting litigation risk.

Key Takeaway 1: Disclaimers are Critical

As more and more companies publish reports on ESG performance, like disclaimers on forward-looking statements in SEC filings, companies are beginning to include disclaimers in their ESG reports, which disclaimers may or may not provide protection against potential litigation risks. In many cases, the language found in ESG reports will mirror language in SEC filings, though some companies have begun to tailor them specifically to the content of their ESG reports.

From our limited survey of companies across four industries that receive significant pressure to publish such reports—Banking, Chemicals, Oil & Gas and Utilities & Power—the following preliminary conclusions were drawn:

  • All companies surveyed across all sectors have some type of “forward-looking statement” disclaimer in their SEC filings; however, these were generic disclaimers that were not tailored to ESG-specific facts and topics or relating to items discussed in their ESG reports.
  • Most companies had some sort of disclaimer in their Sustainability Report, although some were lacking one altogether. Very few companies had disclaimers that were tailored to the specific facts and topics discussed in their ESG reports:
    • In the Oil & Gas industry, one company surveyed had a tailored ESG disclaimer in its ESG Report; all others had either the same disclaimer as in SEC filings or a shortened version that was generally very broad.
    • In the Banking industry, two companies lacked disclaimers altogether, but the rest had either their SEC disclaimer or a shortened version.
    • In the Utilities & Power industry, one company had no disclaimer, but the rest had general disclaimers.
    • In the Chemicals industry, three companies had no disclaimer in their reports, but the rest had shortened general disclaimers.
  • There seems to be a disconnect between the disclaimers being used in SEC filings and those found in ESG In particular, ESG disclaimers are generally shorter and will often reference more detailed disclaimers found in SEC filings.

Best Practices: When drafting ESG disclaimers, companies should:

  • Draft ESG disclaimers carefully. ESG disclaimers should be drafted in a way that explicitly covers ESG data so as to reduce the risk of litigation.
  • State that ESG data is non-GAAP. ESG data is usually non-GAAP and non-audited; this should be made clear in any ESG Disclaimer.
  • Have consistent disclaimers. Although disclaimers in SEC filings appear to be more detailed, disclaimers across all company documents that reference ESG data should specifically address these issues. As more companies start incorporating ESG into their proxies and other SEC filings, it is important that all language follows through.

Key Takeaway 2: ESG Reporting Can Pose Risks to a Company

This article highlighted the clear risks associated with inattentive ESG disclosure: potential litigation; bad publicity; and significant costs, among other things.

Best Practices: Companies should ensure statements in ESG reports are supported by fact or data and should limit overly aspirational statements. Representations made in ESG Reports may become actionable, so companies should disclose only what is accurate and relevant to the company.

Striking the right balance may be difficult; many companies will under-disclose, while others may over-disclose. Companies should therefore only disclose what is accurate and relevant to the company. The US Chamber of Commerce, in their ESG Reporting Best Practices, suggests things in a similar vein: do not include ESG metrics into SEC filings; only disclose what is useful to the intended audience and ensure that ESG reports are subject to a “rigorous internal review process to ensure accuracy and completeness.”

Key Takeaway 3: ESG Reporting Can Also be Beneficial for Companies

The threat of potential litigation should not dissuade companies from disclosing sustainability frameworks and metrics. Not only are companies facing investor pressure to disclose ESG metrics, but such disclosure may also incentivize companies to improve internal risk management policies, internal and external decisional-making capabilities and may increase legal and protection when there is a duty to disclose. Moreover, as ESG investing becomes increasingly popular, it is important for companies to be aware that robust ESG reporting, which in turn may lead to stronger ESG ratings, can be useful in attracting potential investors.

Best Practices: Companies should try to understand key ESG rating and reporting methodologies and how they match their company profile.

The growing interest in ESG metrics has meant that the number of ESG raters has grown exponentially, making it difficult for many companies to understand how each “rater” calculates a company’s ESG score. Resources such as the Better Alignment Project run by the Corporate Reporting Dialogue, strive to better align corporate reporting requirements and can give companies an idea of how frameworks such as CDP, CDSB, GRI and SASB overlap. By understanding the current ESG market raters and methodologies, companies will be able to better align their ESG disclosures with them. The U.S. Chamber of Commerce report noted above also suggests that companies should “engage with their peers and investors to shape ESG disclosure frameworks and standards that are fit for their purpose.”

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actualités internationales Divulgation Gouvernance normes de droit

Tranparence en matière de COVID-19 : quel bilan des entreprises aux États-Unis ?

David Larcker, Bradford Lynch, Brian Tayan et Daniel Taylor publient un texte qui revient sur la transparence des ghrandes entreprises américaines en matière de COVID-19 « The Spread of Covid-19 Disclosure » (29 juin 2020). Un document plein de statistiques et de tendances sur la transparence… vraiment intéressant sachant que l’enjeu de la question n’est pas à négliger.

Extrait :

The COVID-19 pandemic presents an interesting scenario whereby an unexpected shock to the economic system led to a rapid deterioration in the economic landscape, causing sharp changes in performance relative to expectations just a few months prior. For most companies, the pandemic has been detrimental. For a few, it brought unexpected demand. In many cases, supply chains have been strained, causing ripple effects that extend well beyond any one company.

How do companies respond to such a situation? What choices do they make, and how much transparency do they offer? How does disclosure vary in a setting where the potential impact is so widely uncertain? The COVID-19 pandemic provides a unique setting to examine disclosure choices in a situation of extreme uncertainty that extends across all companies in the public market. This devastating outlier event provides a rare glimpse into disclosure behavior by managers and boards.

Why This Matters

  1. The COVID-19 pandemic provides a unique opportunity to examine disclosure practices of companies relative to peers in real time about a somewhat unprecedented shock that impacted practically every publicly listed company in the U.S. We see that decisions varied considerably about whether to make disclosure and, if so, what and how much to say about the pandemic’s impact on operations, finances, and future. What motivates some companies to be forthcoming about what they are experiencing, while others remain silent? Does this reflect different degrees of certitude about how the virus would impact their businesses, or differences in managements’ perception of their “obligations” to be transparent with the public? What does this say about a company’s view of its relation and duty to shareholders?
  2. In one example, we saw a consumer beverage company make zero references to COVID-19 in its SEC filings and website, despite the virus plausibly having at least some impact on its business. In another example, we saw a company claim no material changes to its previously reported risk factors when managers almost certainly had relevant information about the virus and the likely impact on sales and operations. What discussion among the senior managers, board members, external auditor, and general counsel leads to a decision to make no disclosures? What should shareholders glean from this decision, particularly in light of peer disclosure?
  3. The COVID-19 pandemic represents a so-called “black swan” event that inflicted severe and unexpected damage to wide swaths of the economy. What strategic insights will companies learn from this event? Can boards use these insights to prepare for other possible outlier events, such as climate events, terrorism, cyber-attacks, pandemics, and other emergencies? Should these insights be disclosed to shareholders?

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