A corporate governance framework for European companies

EU legislation on corporate governance is a patchwork of binding, but also non-binding measures. For example, it comprises non-binding codes on corporate social responsibility (CSR) and a non-binding obligation on companies to provide equal pay for equal work, irrespective of an employee's gender.

In April 2011, to verify the effectiveness of European corporate governance legislation, the Commission published a strategy paper. Parliament responded by adopting a position that set out to define the broad lines of future negotiations on this issue.

The Greens believe that the vast majority of non-binding measures in EU corporate governance legislation have proved highly ineffective. For example, European companies have not managed to achieve balanced gender representation on company boards and the code on CSR often benefits the printers of glossy brochures more than companies' employees or clients.

Also, many European businesses still tend to prefer the taking of excessive short-term risks to a commitment to adopt long-term investment and development strategies.

For these reasons, more binding measures are required, instead of persevering with an inadequate patchwork of provisions too many of which are non-binding anyway.

The Greens succeeded in highlighting the divisions in Parliament over this issue.

The EPP rapporteur's very industry-friendly approach, demanding that non-binding rules only apply to listed companies, was supported by the ALDE, ECR and EFD.

The Greens could not support it and therefore teamed up with the S&D to propose an alternative.

Unfortunately, this joint proposal failed to secure majority support, so the Conservative groups' industry-friendly approach prevailed.