EU rules on corporate governance as means to promote sustainability?

Abstrakt

Aim: As part of the recent economic and financial crisis management in the EU new regulatory measures have been adopted which are of relevance for company law and corporate governance. Although the modalities of corporate governance are primarily determined by companies themselves, the establishment of basic national and EU level rules is required so that minimum standards are respected in the public interest. With regard to EU competences, they pertain to full implementation of and safeguarding proper functioning of the EU internal market (Article 3(3) TEU and Articles 26-27 TFEU). The purpose of this paper is to analyse EU regulatory measures in the field of corporate governance with a view to their potential positive impact on sustainable functioning of European companies, notably in the financial sector, and thus also the stability of the financial system at large.

Design/research methods: The applied research methodology includes a combination of theoretical and analytical methods. The paper is based on a review of relevant literature and an analysis of EU regulatory measures pertaining to inter alia new capital requirements for financial institutions, shareholder’s involvement and risk management.

Conclusions/ Findings: It is submitted that, at least in theoretical terms, the analysed regulatory measures have a potential of improving sustainability of single companies, thereby translating into improved reliability of the whole financial system, also by way of reducing the risk of moral hazard of failing banks counting on public money injections.

Implications/ Limitations of the research: The real impact on sustainability may, however, only be assessed once the discussed EU measures have been fully implemented or, as the case may be, where and on condition that they are fully endorsed by the companies themselves. In that regard, the theoretical and analytical methods applied in this research prove insufficient to provide a fully satisfactory answer to the research question, with the real impact of the discussed measures on sustainability being a potentially interesting field of study on the basis of a sample of system relevant financial institutions in the years to come.