Today, corporate governance is an inevitable topic of discussion in the boardrooms, academic roundtables, and policymakers worldwide. Increased demand for continuous improvement and transparency in the boardroom has heightened the changing pace for boards worldwide. Russell Reynolds Associates interviewed nearly 40 global institutional and activist investors, proxy advisors, pension fund managers, and corporate governance professionals to identify the corporate governance trends that will impact boards and directors in the coming days.
In this article at Harvard Law School Forum on Corporate Governance, Rusty O’Kelley and Anthony Goodman cite Russell Reynolds Associates’ studies and share the overview of global and regional corporate governance trends.
Overview of Global Trends
Emphasis on Corporate Purpose
According to the studies, many CEOs cornered the traditional view that maximizing shareholder returns is a priority. Many organizations are putting stakeholders at the heart of a company’s purpose, and this trend is expected to continue in days to come.
Growing Importance of Corporate Culture
The research has also revealed that the directors would appreciate culture’s impact on retention, hiring, and productivity. Management will have to demonstrate to the board that the company has the culture and talent needed to execute on strategy successfully.
Inclusion of Ethnicity and Race
“Considerable strides have been made globally around board gender diversity,” says the authors. Boards will begin to experience pressure to consider racial and ethnic diversity. However, it will be harder for this trend to gain traction because collecting data on race and ethnicity is highly regulated or illegal.
Wider Forms of Activism
According to research, investor activism continues to evolve and grow globally. For instance, in some countries, employee shareholder activism around ‘#metoo’ or climate risk has successfully garnered public attention and impacted the management decisions. To prepare for such situations, the board must improve their effectiveness through more robust board evaluation processes. Additionally, boards engaged with management in scenario planning must ensure role clarity in crises.
To know more about regional trends, click on https://corpgov.law.harvard.edu/2020/01/18/2020-global-and-regional-corporate-governance-trends/.