The OECD has published the new G20/OECD Principles of Corporate Governance approved by the G20 in September 2023.
The Principles provide guidance to help policy makers evaluate and improve the legal, regulatory and institutional framework for corporate governance, with a view to supporting market confidence and integrity, economic efficiency, sustainable growth and financial stability.
The Principles reflect a strong desire from all OECD and G20 Members to see the Principles offer guidance on companies’ sustainability and resilience, and will help companies manage environmental and social risks, with insights on disclosure, the roles and rights of shareholders as well as stakeholders and the responsibilities of company boards.
First, they help companies improve access to finance, particularly from capital markets. By doing so, they promote investment, innovation, and productivity growth, and foster economic dynamism more broadly.
Second, they provide a framework to protect investors, which include households with invested savings. A formal structure of procedures that promotes the transparency and accountability of board members and executives to shareholders helps to build trust in markets.
Third, they support the sustainability and resilience of corporations which, in turn, contributes to the sustainability and resilience of the broader economy.
The objectives are to help improve companies’ access to financial markets in an environment where investor expectations are evolving and to support investor confidence on the basis of more transparent market information and reinforced investor rights.
The Principles will help address the growing role of institutional investors by promoting stewardship codes, and the disclosure of conflicts of interest by advisory services, like proxy advisors and Environmental, Social and Governance index providers. They also include new recommendations which reflect the increasing importance of corporate debt and the role of bondholders in capital markets.