EU SUSTAINABILITY DIRECTIVE AND CORPORATE GOVERNANCE: IMPLICATIONS FOR 15 OF THE LARGEST EU COMPANIES

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Abstract

This paper analyzes 15 of the largest EU public companies, including Volkswagen, that were included in Forbes’ 2015 list of “The World’s Biggest Public Companies” in order to investigate possible best practices for long-term sustainability, as emphasized by the EU Sustainability Directive. CEO pay and various well-known financial ratios were correlated with market capitalization creation to create a sustainability score which was then correlated to market cap creation to indicate possible long-term sustainability practices. Key correlations were CEO pay, sales growth, profit margin, and leverage or adequacy of capital. Such key variables could then be monitored for possible long-term sustainability practices by Boards of Directors for good corporate governance, as opposed to recent bad corporate governance by Volkswagen. In just the last year, Volkswagen managed to destroy all the prior three years of its market cap creation.

Keywords: Sustainability; Corporate Governance; Market Capitalization

Received: 20.11.2016

Accepted: 27.03.2017

How to cite this paper: Grove, H., & Clouse, M. (2017). EU sustainability directive and corporate governance: Implications for 15 of the largest EU companies. Corporate Ownership & Control, 14(3-2), 329-337. https://doi.org/10.22495/cocv14i3c2art7