INTRODUCTION Contributed by: James Palmer, Gareth Sykes and Isobel Hoyle, Herbert Smith Freehills Kramer
removing obstacles to business efficiency and utilising innovation to drive it. Regulators which have been tasked with reviewing their current rulebooks include the Financial Services Author - ity and the Competition and Markets Authority. In an EU context, Mario Draghi, the former Euro - pean Central Bank chief, published a report on the future of European competitiveness in Sep - tember 2024. The report, which will inform the EU Commission’s political guidelines for 2024 to 2029, looks at how to boost sustainable growth, identifies key barriers preventing Europe from reaching its full potential and presents a new industrial strategy for the EU. Looking to the US, there has been much atten - tion on initiatives being introduced by the US government to reduce the level of regulation and perceived bureaucracy, in a bid to drive US economic growth and prosperity. An early example of these initiatives is the decision of the US Securities and Exchange Commission (SEC) to cease its defence of the rules that it had proposed in relation to climate-related dis - closures by listed entities. Having been adopted by the SEC in 2024, the rules had been chal - lenged by various interested parties on account of the anticipated burden they would place on in-scope companies and the potential for con - flict between the US rules and climate-related disclosure requirements in other jurisdictions, and were subject to judicial review. The deci - sion of the SEC to cease its defence means that these disclosure obligations are unlikely to sur - vive under the current US government, although California and other US states have continued to regulate climate reporting at the state level. More broadly, the newly established Department of Government Efficiency has been tasked with looking at federal spending and making recom - mendations for reform.
While companies will no doubt welcome a reduc - tion in their regulatory burden, boards may at times also consider whether any of the measures being revised remain beneficial in the context of their companies’ specific strategies and culture. The views and interests of key stakeholders in the company will be fundamental in this assess - ment. Reducing the Reporting Burden Corporate reporting is an aspect of the govern - ance landscape which many jurisdictions are currently evaluating, to ascertain whether the correct balance is being attained. On the one hand, there are the benefits of transparency for shareholders and other interested stakeholders (including regulators and wider market partici - pants) but against that the costs of monitoring, gathering and disseminating this information need to be factored into the equation. Candid consideration of costs of transparency has not been a primary consideration in expanded gov - ernance transparency for some years. A well- balanced system will aim to deliver decision- useful information to the relevant stakeholders, without imposing disproportionate costs or sti - fling entrepreneurialism. It will also need to be kept under regular review to ensure that a rea - sonable balance is maintained. Narrative, non-financial disclosures have in recent years added significantly to the volume and complexity of the reporting obligations placed on companies, particularly in the area of environmental, social and governance (ESG) reporting. There are initiatives in place in a num - ber of jurisdictions to re-evaluate these obliga - tions and assess whether an appropriate bal - ance is currently being achieved. In the UK, the government is continuing with the review of non-financial reporting requirements,
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