Europe must defend its corporate governance values
When I delivered my inaugural lecture, Board Agenda 2035, in May 2024, the world looked completely different. The international response to Ukraine was unanimous, and companies were faced with the challenge of transitioning to a sustainable business model. Management and supervisory board members were grappling primarily with activism from institutional shareholders and stakeholders as well as the question of how to comply with ESG reporting requirements. A year and a half later, that reality seems far away. In America, national interests and political issues are increasingly determining the course of business. The United States is unleashing trade wars and is no longer Europe's loyal ally, whereby our security has been put at risk. In response, Europe is working towards greater strategic autonomy, particularly in the areas of raw materials, defense, AI, and digital infrastructure.
For Dutch executives and supervisory board members, this represents a fundamental shift. In a short time, good governance and geopolitics have become closely intertwined. This new reality is increasing pressure on the boardroom. What is going on? Which trends and changes require attention, and how can management and supervisory board members anticipate them?
Broadening the concept of risk
The days when executives and supervisory board members had to focus only on financial risks are long gone. In recent years, the concept of risk within corporate governance has broadened and deepened significantly. Social and economic developments, including the financial crisis, global warming, and the desired transitions around ESG and AI, are leading to an increasingly broad scope. The complexity of these themes lies not only in their content but also in the shift towards the long-term effects of business models and the need to oversee all parts of the value chain.
This is clearly reflected in recent legislation on IT and AI. And even though attention to ESG is declining globally, that does not mean that this issue will disappear from the agenda. Reinsurers continue to warn that policies are being reinsured in a small international pool. Increased climate damage worldwide is depleting that pool more quickly, with direct consequences for insurability in the Netherlands, for both households and businesses. The consequences of climate damage elsewhere are thus becoming a financial issue for Dutch companies. The role of ESG as a rational response to long-term risks is therefore not yet over.
Geopolitical developments: politicization and regionalization
Geopolitical developments are also forcing the boardroom to reorient itself. Traditional alliances are crumbling, and companies must take a critical look not only at Russia and China, but also at the United States. It is not without reason that the World Economic Forum's Global Risks Report warns that the greatest short-term risks are currently geopolitical in nature.
The question of who our friends are is obviously relevant for determining supply chain dependencies and security of supply in relation to raw materials, defense, ICT, and AI. But there is more at stake. The call for strategic autonomy and industrial policy advocated in the Draghi report, for example, has a direct impact on public procurement, subsidies, and protection in designated strategic sectors, but also on the tradability of shares, mergers and acquisitions, and the relationships between companies within and outside these sectors. Such a call can also have consequences for the nationality of both management and supervisory board members when appointments are made. It is therefore advisable to continue to critically examine the calls for strategic autonomy and industrial policy.
Looking more broadly, we see that the US is actively obstructing the handling of issues such as DEI (diversity, equality, and inclusion), even outside its own borders. Furthermore, the US Securities and Exchange Commission (SEC) wants European companies to report according to the US GAAP system, as this allows ESG issues to remain out of the picture. Such a step has consequences for the way in which ratings are established, proxy advisors provide their advice, and institutional investors engage in dialogue with companies.
Internal Autocracy
In addition, fundamental safeguards for good governance are also under pressure in the US. One example is the reaction to the ban on paying a multi-billion-dollar bonus to Elon Musk, because, according to the court, there was insufficient independent oversight of the board. This led to a reported exodus of large companies from the state of Delaware. Another cause for concern is that ExxonMobil took its own shareholders to court and that the SEC allowed the same ExxonMobil to introduce a new voting system for private shareholders’ automatic agreement with the board. These examples illustrate how fundamental concepts of good corporate governance, such as supervisory board independence, the protection of minority shareholders, and judicial oversight, are under pressure in the US. These shifts toward autocratic relationships in the boardroom, more unbridled power for the board and major shareholders, also demonstrate how the approach to corporate governance principles between the US and Europe is diverging.
Fiduciary Duties
Parallel to these developments, there is a discussion about fiduciary duties, or who an institutional investor or board member should serve, and how broad that duty extends. From around 2015 onward, Larry Fink, CEO of the investment fund BlackRock, spoke out very publicly in favor of ESG reporting, based on the idea that climate risks would undermine the stability of the financial system. From 2022, he was strongly criticized: was he acting in the interest of his clients by prioritizing such broad and long-term interests? This illustrates a broader trend in which short-term financial interests are once again being placed at the center of corporate governance theory and institutions.
At the same time, we see how institutional investors, particularly in Europe, continue to focus on ESG in their investment and engagement policies. Here, too, we see a regionalization with regard to what is understood by ‘good corporate governance’.
High Time for a Europe-First Strategy
Both the transitions surrounding ESG and AI and the rapidly increasing geopolitical tensions are putting pressure on the boardroom. The question is what the growing demand for time and specialized knowledge from board members will do to the Dutch two-tier model, in which a supervisory board meets a limited number of times per year. I expect that we will move towards a one-and-a-half-tier board, in which the Dutch separation between executives and non-executives will be maintained, but the involvement and available time of supervisors will be substantially increased.
Current events, however, demand a critical rethinking of what we understand by good European corporate governance, not only within the boardroom but also outside it.
I advocate a Europe First strategy, which has three pillars:
1. Market thinking versus state influence thinking:
In a world where more and more countries are strategically deploying state resources in the private sphere, it would be naive to adhere unconditionally to the principles of free trade. Such naiveté would lead to Europe simply giving up its industry. At the same time, it is important to remain very critical of the growing influence of the state in the private sphere, because excessive interdependence between the state and the private sector can quickly lead to high economic costs, unequal treatment between sectors and companies, and the improper use of protective mechanisms.
2. Protection of European principles: We must remain aware of and adhere to the legal principles of corporate governance, whereby checks and balances, independence, protection of minority shareholders, and the role of judicial oversight, as well as the stakeholder principle and a concrete approach to the long-term consequences of externalities, remain central principles.
3. Strategic choices and new alliances: In light of the fragmentation of corporate governance standards, Europe would do well to consider forming new international alliances and ecosystems. This could include strengthened cooperation with countries that share our vision of good governance and support for European rating agencies and proxy advisors.
Reflection on a Europe First strategy is urgent. The changes in the US are pushing the debate on corporate governance to a point where core values such as the rule of law, the role of the judiciary, checks and balances, and the protection of minority shareholders are coming under pressure worldwide. This movement threatens to deprive both management and supervisory board members of their mandate to respond rationally to long-term risks, and we run the risk of external autocracy translating into movements toward internal autocracy. Let us therefore defend our core values around corporate governance in Europe.
This article was published in Management Scope 01 2026.