On 7 February, the EC published a call for advice (https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190201-call-for-advice-to-esas-short-term-pressure_en.pdf) to the European Supervisory Authorities (ESAs) to collect evidence of undue short-term pressure from the financial sector on corporations. The call for advice, which is accompanied by a cover letter to the ESAs Chairmen (https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190201-call-for-advice-to-esas-short-term-pressure-cover-letter_en.pdf), relates to action 10 of the EC Action Plan on Financing Sustainable Growth (https://ec.europa.eu/info/publications/180308-action-plan-sustainable-growth_en )that aims at fostering sustainable corporate governance and attenuating short-termism in capital markets.
Through the call for advice, the ESAs are invited to assess, based on qualitative and quantitative evidence, whether there are practices that generate undue short-term pressure in the financial sector. The final report will include the following:
1) Initial evidence of undue short-termism within the respective remits of each ESAs and its potential consequences
2) Assessment of possible drivers of undue short-termism, including earnings guidance or remuneration practices
3) Identification of regulatory areas contributing to or exacerbating undue short-termism
4) Evidence-based recommendations