Tuesday - January 5, 2021 | Corporate Governance
It’s 2021: Time to reset corporate governance
(This article originally appeared in Lawyer’s Daily, January 5, 2021)
Now, more than ever, board members and other business leaders must be equipped with the necessary tools to navigate unprecedented levels of uncertainty. The global business landscape continues to evolve in response to an acceleration of globalization, proliferation of technology and elevated urgency surrounding a changing climate and biodiversity loss.
Board members and other business leaders are forced to address these challenges against the backdrop of the COVID-19 pandemic. Undoubtedly, the adverse impacts generated by these complex phenomena indicate that a great-reset in corporate governance is not only necessary but required — and business leaders must be prepared.
Using survey data collected by ESG Competent Boards, this article evaluates insights from the Competent Boards’ global faculty and other business leaders in an effort to determine the quintessential competencies, qualities and traits that board members will need to be effective stewards in the 21st century.
The results indicate that effective stewardship requires deep reflection on purpose, analysis of strategy and consideration of all perspectives in order to achieve short-term profitability and long-term sustainable value creation. Leading organizations and its stewards hold the responsibility and resources to build and enforce an organizational culture that is committed to principles of inclusion, gender and racial equality, as well as planetary justice.
To achieve this, future-ready board members will hold a deeply rooted sense of curiosity and willingness to learn. They will be prepared to adapt their outlook as they make a conscious effort to listen to stakeholders who each carry diverse and adverse expectations. They are quick to recognize the interconnectivity of needs and are committed to finding solutions that meet environmental, stakeholder and shareholder demands.
Collectively, future-ready stewards are guided by a value-driven purpose that promotes health and well-being through demonstrable action in dissolving systemic inequalities to build more equitable, diverse and prepared companies. A mission that goes beyond the purpose and requires a high calibre of accountability in delivering on promises.
Demanding new competencies from board members
In a fast-paced environment with many unknowns, the new competencies required of board members are multifaceted. The most common survey response indicates competency with ESG (environmental, social, governance) and sustainability as an essential element of the future-ready toolbox. Future-ready board members should engage with the tools, resources, and opportunities available to broaden their understanding of critical ESG topics and how to address them. This is imperative to the organization’s social licencse to operate and ability to succeed across projected climate scenarios. Further, the board matrix should reflect these competencies so stakeholders can evaluate the board of directors’ preparedness level.
Moreover, future board members should have the ability to not only voice their own opinion but also openly engage with the views of others in avoidance of common boardroom biases. The survey data indicates that a future-ready board member is both forthright and precise in their questioning and careful not to accept answers readily.
Diverse qualities and perspectives needed
It is found that the personal attributes or traits within an individual’s internal value system may also play a role in defining a board member who is future-prepared. The findings suggest that being courageous, empathetic and persuasive in the boardroom will help to promote compelling dialogue for better decision making. The survey responses also outline the importance of approaching challenges and mistakes with an entrepreneurial mindset. It is an attitude that stimulates creative problem-solving in times of uncertainty when no playbook exists.
Further, board members should be forthright in their effort to bring all dimensions of diversity to the table and bring a perspective that may not have existed previously. Each board seat must hold an individual who embodies a global citizen mindset and is committed to demonstrating action towards strengthening diversity, equity and inclusion.
As we continue to observe a forceful evolution of the global business landscape for ESG and sustainability, we hope these insights will help current or aspiring board members reflect and act on what they need to cultivate to lead companies through future storms effectively.BACK TO NEWS & VIEWS