Report ecoDa - Annual conference 2012

CoE (Comply or explain) offers the flexibility to fit with the large diversity among and within the different EU Member States. The quality of explanation is the core factor for upgrading the legitimacy of the CoE approach. However, defining quality requirements is not a straightforward exercise. With its printed report, ecoDa wanted to feed further the debate and to enhance the European discussions.

For some years, the quality of governance in general and of the explanations for not following the recommended best practices specified in corporate governance codes has been a key issue for policymakers, investors, companies and wider society. However, different factors have played a role in the gradual improvement of the quality of explanations. More should be done to increase the effectiveness of the governance codes and to foster a better dialogue between companies and their shareholders. Transparency and monitoring are only a first step in the direction of a well-governed company. Complementary monitoring capability is best provided by a regular and thorough (independent) governance (or board) assessment.

Companies should develop a governance model that helps them to reach the corporate goal and allows them to make effective decisions in the long term interest of the company, shareholders and stakeholders. The board is a crucial factor to this end. But also shareholders have to play their role to foster growth, strategy, entrepreneurship and sustainability.

People should not forget that governance is not an end in itself but a means to an end.