OECD's 2025 Insights On Board Responsibilities

OECD'S 2025 INSIGHTS ON BOARD RESPONSIBILITIES

The Organisation for Economic Co-operation and Development ("OECD") defines corporate governance as, "Corporate governance involves a set of relationships between a company's management, its board, its shareholders and other stakeholders." Corporate governance, while increasingly popular as a concept, has also become a growing dynamic within national and international legislative frameworks.

Since 2015, the OECD has published the OECD Corporate Governance Factbook every two years, providing key insights into the implementation of the G20/OECD Principles of Corporate Governance ("Principles") across different jurisdictions.

The OECD Corporate Governance Factbook 2025 ("Factbook"), published on October 6, 2025, drafts a picture of board responsibilities for sustainability policies while discussing various other matters regarding sustainability disclosure requirements transition planning and the scope of sustainability disclosures related to value chain information.

The role of the board, the dialogue between a company and its shareholders and stakeholders on sustainability related matters in line with the recommendations from Principles are explained with a comparison of the member OECD countries.

The Sub-Principle VI.A.3 foresees that a corporate disclosure framework should consist efficient and sufficient material information while not only giving promotional insights. The measurement and reporting of any sustainability-related information should be as rigorous as it will be applied to a financial information. A disclosure should consist financial information linked to the sustainability issues and reflect material sustainability matters in financial assumptions. As it is confessed in the Factbook that in most jurisdictions the financial and sustainability disclosures are approved by the same corporate body.

According to the Principle VI.C., the OECD emphasizes that corporate governance frameworks should ensure boards to consider key sustainability risks and opportunities in their oversight of governance, disclosure, strategy, risk management and internal controls. Boards are increasingly integrating sustainability into decision-making, including evaluating its impact on risk profiles, executive remuneration and board practices. OECD due diligence standards provide a valuable framework for embedding sustainability in risk management. The Factbook presented that the percentage of jurisdictions foreseeing the adoption of sustainability-related policies, either as a requirement or recommendation, by the board of directors has risen to 71%, up from 51% at the end of 2022.

According to the Sub-Principle VI.C.1, boards should ensure that company lobbying aligns with sustainability goals and oversee management's lobbying activities and financing to support the company's long-term sustainability strategy. For example, opposing carbon pricing may boost short-term profits but contradicts a low-carbon transition goal. In some jurisdictions, boards also oversee disclosure of political donations related to lobbying. Majority of the Factbook jurisdictions do not enforce clear rules or make suggestions that boards supervise lobbying efforts and/or political contributions while such oversight is required under law or regulation in 15% of these jurisdictions.

Furthermore, Table 5.3 of the Factbook projects information on jurisdictions, board responsibilities for sustainability- related policies, key resources for board responsibilities for sustainability-related policies, disclosures of lobbying activities and political donations, as well as the board oversight of lobbying activities and/or political donations. In this context, the most remarkable section of the Table 5.3 is the part that outlines the main sources regarding the board of directors' responsibilities concerning sustainability policies. Türkiye is also listed in the Table 5.3 with the Communique on Corporate Governance Principles Sustainability Principles Compliance Outline (Entered into force on October 2, 2020).

Beyond board responsibilities, the Factbook provides a comprehensive overview of other sustainability-related developments across jurisdictions. These findings reflect a growing regulatory convergence towards transparency, accountability, and due diligence in corporate sustainability practices.

• Sustainability-Related Disclosure Frameworks: The Factbook highlights that nearly 79% of jurisdictions now mandate sustainability-related disclosures through legislation, while 11% impose such requirements through listing rules and another 8% through soft-law instruments such as governance codes or guidelines. This represents a notable shift from previous years, where voluntary or recommended disclosure frameworks predominated. The 2025 edition emphasizes a trend toward legally binding disclosure obligations and greater alignment with international standards such as the ISSB and EU CSRD frameworks.

• Scope and Content of Sustainability Disclosures: Sustainability reporting has evolved from a narrative-driven exercise to a structured and data-based framework encompassing not only direct operations but also upstream and downstream value chain activities. The Factbook underscores that many jurisdictions now require companies to disclose information on transition planning, including net-zero commitments, decarbonization strategies, and climate risk management processes. In addition, jurisdictions are expanding the definition of materiality to capture both financial and environmental, social, and governance ("ESG") impacts.

• ESG Rating and Index Providers: Another emerging topic covered in the Factbook concerns the regulation of ESG rating and index providers. Several jurisdictions have introduced or are developing oversight mechanisms to enhance transparency, methodology disclosure, and conflict-of-interest management among ESG data and service providers. The OECD notes that inconsistent rating methodologies have long been a barrier to comparability across markets; thus, greater regulatory scrutiny is intended to ensure that ESG scores genuinely reflect corporate sustainability performance.

• Assurance of Sustainability Information: The reliability of sustainability data is becoming increasingly central to investor confidence and stakeholder trust. According to the Factbook, around 60% of jurisdictions now require or recommend third-party assurance of sustainability disclosures. Such assurance mechanisms are progressively aligned with established auditing standards, ensuring that sustainability-related information is subject to the same level of rigor and credibility as financial reporting. This development underscores the OECD's position that sustainability metrics should be integrated into corporate governance and risk management systems with equivalent verification standards.

The Factbook underscores the growing integration of sustainability into the core of corporate governance frameworks, emphasizing transparency, accountability, and responsible board oversight. As jurisdictions continue to align their legal and regulatory structures with global sustainability standards, corporate boards are expected to act as key drivers of long-term value creation and sustainable economic growth.

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