Oecd legal Instruments

information and independence. 
When employee representation on boards is mandated by the law or collective agreements, or adopted 
voluntarily, it should be applied in a way that maximises its contribution to the board’s independence, 
competence, information and diversity. Employee representatives should have the same duties and 
responsibilities as all other board members, and should act in the best interest of the company. 
Procedures should be established to facilitate access to information, training and expertise, and ensure the 
independence of employee board members from the CEO and executives. These procedures should also 
include adequate and transparent appointment procedures, rights to report to employees on a regular basis 
– provided that board confidentiality requirements are duly respected – training, and clear procedures for 
managing conflicts of interest. A positive contribution to the board’s work will also require acceptance and 
constructive collaboration by other members of the board as well as by management. 
VI. Sustainability and resilience 
The corporate governance framework should provide incentives for companies and their investors 
to make decisions and manage their risks, in a way that contributes to the sustainability and 
resilience of the corporation. 
OECD/LEGAL/0413
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Companies play a central role in our economies by creating jobs, contributing to innovation, generating 
wealth, and providing essential goods and services. Countries have made commitments to transition to a 
sustainable, net-zero/low-carbon economy in line with the Paris Agreement and the Sustainable 
Development Goals, which will require companies to respond to rapidly changing regulatory and business 
circumstances taking into account any applicable policies and transition paths followed by different 
jurisdictions. In addition, many companies and investors are setting voluntary goals or otherwise taking steps 
to anticipate a future transition towards sustainable development. A sound corporate governance framework 
would allow investors and companies to consider and manage the potential risks and opportunities 
associated with such transition pathways, which in turn may contribute to the sustainability and resilience of 
the economy. 
In addition, investors are increasingly considering disclosures about how companies assess, identify and 
manage material climate change and other sustainability risks and opportunities, including for human capital 
management. In response, many jurisdictions require or plan to require disclosures about companies’ 
exposure to and management of sustainability matters. A core feature of these disclosures is to provide 
investors with a better understanding of the governance and management structures and processes for 
managing climate and other sustainability risks and identifying related opportunities. The corporate 
governance framework should support both the sound management of these risks and the consistent, 
comparable and reliable disclosure of material information in order to support investors’ financial, investment 
and voting decisions. The combination of sound governance and clear disclosures will promote fair markets 
and the efficient allocation of capital, while supporting companies’ long-term growth and resilience. 
Several jurisdictions have oriented their capital market policies to foster a more sustainable and resilient 
corporate sector. In doing so, such policies should aim to also preserve access to capital markets by 
preventing prohibitively high costs of listing a company while still ensuring that investors have access to the 
information necessary to allocate capital efficiently to companies. Investors, directors and key executives 
must also be open to a constructive dialogue on the best strategy to support the company’s sustainability 
and resilience. A company that takes account of stakeholder interests may be better able to attract productive 
workforce, support from the communities in which it operates, and more loyal customers 
In jurisdictions that allow for or require the consideration of stakeholders’ interests, companies should still 
consider the financial interests of their shareholders. A profitable company provides jobs for its workforce 
and creates value for investors, many of whom are part of the general public and have invested their 
retirement savings.
Corporate directors are not expected to be responsible for resolving major environmental and societal 
challenges stemming from their duties alone. To guide corporate activities, sectoral policies that make 
companies internalise environmental and social externalities as well as corporate governance frameworks 
that set predictable boundaries within which directors have to exercise their fiduciary duties should be 
considered by policy makers. These policies could relate to, for instance, environmental regulation, or directly 
investing in or incentivising research and development of technologies that may contribute to addressing 
major environmental challenges.