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SRD II survey: are member states prepared?

New Hermes research shows many European investors are not yet prepared for incoming stewardship responsibilities - explore our infographic

Key points

  • With the aim of enhancing the stability and sustainability of EU companies, in May 2017, the European Parliament and Council agreed an amendment to the 2007 Shareholder Rights Directive (the Directive)
  • Hermes surveyed European investors to gauge levels of awareness and readiness for the amendment of the Directive
  • Only 3% believe their organisation already meets all the requirements of the Directive
  • 42% of European investors surveyed have not heard of the Directive
  • German respondents showed the highest levels of awareness of the Directive at 88%
  • Alarmingly, no investors in Spain or Italy fully comply with the requirements

Shareholder Rights Directive 

For too long, the majority of the investment community has neglected its fiduciary responsibilities; whilst investors focused on short-term financial returns, most failed to notice the approaching global financial crisis (GFC).

Systematic failures were recognised by the European Commission, which in its amendment to 2007’s Shareholder Rights Directive (the Directive), highlighted that there “is clear evidence that the current level of ‘monitoring’ of investee companies and engagement by institutional investors and asset managers is often inadequate and focuses too much on short-term returns.”1

Hermes advocates change

In the years leading up to, during and following the GFC, Hermes has consistently and vocally advocated for change and helped shape capital markets through public policy and market best practice engagement with legislators, regulators, industry bodies and other standard-setters. We have benefited from extensive experience in the implementation of a number of stewardship and governance codes globally and engaged with businesses on the importance of integrating relevant ESG opportunities and risks into their business strategies to develop sustainable business models. These actions have delivered higher industry standards and in turn, driven legislation such as the Directive.

We believe that the Directive is a profound shift for European asset managers and owners compelling all to end the short-termism that has blighted capital markets, credibly integrate ESG and other long term factors in their investment process and be responsible stewards of investments.

  1. 1 https://oeilm.secure.europarl.europa.eu/oeil-mobile/summary/1493415?t=d&l=en

EOS Sales Contacts

Amy D’Eugenio, Head of Client Service and Business Development, Hermes EOS