The revised G20/OECD Principles of Corporate Governance – a joint G20/OECD effort to help companies navigate changing capital markets while promoting market confidence and financial stability – have been endorsed at the last G20 Leader’s Summit in New Delhi, India.
The Principles provide a global benchmark for legal, regulatory and institutional frameworks for corporate governance. The revisions include new and updated guidance on shareholder rights, the role of institutional investors, corporate disclosure and transparency, the responsibilities of boards, and, for the first time, on sustainability and resilience to help companies manage climate-related and other sustainability risks and opportunities.
“The revised Principles mark a significant, renewed international consensus and a strong desire from all OECD and G20 Members to strengthen guidance on companies’ sustainability and resilience, to help them support the green transition and adapt to climate risks,” OECD Secretary-General Mathias Cormann said.
To promote sound corporate governance and well-functioning capital markets, key changes include:
- Promoting disclosure of sustainability-related information, clarifying the responsibilities of boards on sustainability matters, and recommending dialogue between companies and their shareholders and stakeholders on sustainability matters;
- Addressing the complex range of issues that boards are now expected to manage, including diversity, risk management and the interests of non-shareholder stakeholders;
- Encouraging the use of digital technologies in corporate governance practices and supervision and highlighting boards’ management of digital risks;
- Considering the rise in the role of institutional investors through recommendations on stewardship codes and ESG rating and index providers as well as proxy advisors;
- Reflecting recent developments in ownership concentration, including through recommendations on company groups;
- Providing new recommendations on bondholder rights and debt contracts to address the increase in corporate debt.
“The Principles aim to help companies access financing from capital markets, protect investors, and make companies, and hence our economies, more resilient,” said Japan’s Vice-Minister of Finance for International Affairs Masato Kanda, who chaired the revision. “It was therefore important and timely that we substantially revised them to reflect the many recent evolutions in corporate governance and capital markets.”