This is the second of a four-part series from Prospr Aligned’s head of corporate engagement and proxy voting expert, Jerry Bowyer.
One of the most revealing questions in the ISS survey concerns the European Union’s Corporate Sustainability Reporting Directive (CSRD).
ISS explains that CSRD forms part of the European Commission’s “Action Plan on Financing Sustainable Growth” and is intended to help achieve the objectives of the European Green Deal. That language is coming from the survey itself. The connection is explicit, not inferred.
That makes the framing of the question remarkable.
The survey does not ask whether American companies should be judged by governance frameworks tied to the European Green Deal. It does not ask whether the Green Deal improves shareholder value. It does not ask whether boards should be skeptical of sustainability frameworks developed by European regulators. Instead, it asks how companies and directors should be held accountable within those frameworks.
That distinction is the entire issue.
Imagine a survey that described a major political initiative, then skipped over the question of whether that initiative was desirable and went directly to asking how aggressively compliance should be enforced rather than reversed.
That is essentially what is happening here.
Throughout the survey, the range of acceptable answers tends to run from maintaining current ESG expectations to strengthening them. In the Green Deal section, the debate is largely over how companies should respond to sustainability-assurance concerns and whether directors should face accountability when those concerns arise. Missing from the discussion is a much simpler possibility: perhaps these frameworks should not occupy such an important place in corporate governance to begin with.
That omission matters because the European Green Deal is not a technical accounting framework.
It is a political project.
The Green Deal seeks to redirect energy policy, industrial policy, agriculture, transportation, finance, and corporate decision-making toward climate objectives. Supporters view that as responsible stewardship. Critics view it as a far-reaching effort to subordinate traditional economic priorities to environmental goals. Whatever one’s position, nobody should pretend it is ideologically neutral.
Yet neutrality is precisely what disappears in the survey.
The underlying assumptions are largely treated as settled. Climate disclosure should exist. Sustainability reporting should exist. Sustainability assurance should exist. The main question becomes how strongly companies should be pressured to comply.
That is why the survey deserves scrutiny from fiduciary investors.
Corporate-governance standards do not remain on paper. Today’s governance expectations become tomorrow’s voting recommendations. Tomorrow’s voting recommendations become corporate policies. Over time, frameworks that began as voluntary standards become embedded expectations.
The survey’s treatment of the European Green Deal illustrates that process perfectly.
Rather than asking whether Green Deal objectives belong inside American corporate governance, the survey largely assumes that they do and asks respondents to debate the details.
That is not a debate over implementation.
It is a debate over premises that have already been accepted.