As head of the world’s largest asset manager, Fink made clear BlackRock’s expectation for a new model of shareholder engagement, “that strengthens and deepens communication between shareholders and the companies that they own.”
Reflecting on the events of 2017 and recent conversations with members of the institutional investor community, several high-level themes related to board operations and board leadership on environmental, social, and governance (ESG) issues are likely to be top of mind for investors this year.
Board composition is in the spotlight. The business environment is fast-paced and complex, making it imperative that companies have the right people in the boardroom helping to guide strategy and oversee risk.
Today, many directors are engaging directly with shareholders on a variety of issues—especially when the company is dealing with a crisis. How is the board engaging with the CEO regarding the company’s governance team?
From our perspective, many of these issues fall under the broad rubric of environmental, social, and governance (ESG), from climate change impacts and worker safety to workplace diversity, executive compensation, and board composition.
An ongoing focus by investors on director quality and qualifications since the financial crisis has compelled boards to consider greater transparency on issues such as board composition, tenure, term limits, and diversity.
Given heightened investor expectations for transparency in governance and oversight, having a well-executed plan for communicating the company’s story and gauging investor sentiment on key issues is critical.
Investors are concentrating on what companies are doing—and disclosing—about the potential impact of climate-related risks on business models and operations, leading to calls for climate-competent boards.
Highlights and insights from the 2017 Audit Committee Issues Conference in Boca Raton include Going the Distance, a recap of the conference’s main sessions, including keynote addresses and panel discussions, and Risk Just Got Riskier, detailing key points shared by directors in the accompanying peer exchanges.
The January edition of Directors Quarterly includes insights on the key issues that directors should focus their board agendas on during the year ahead; findings from ACI’s latest global survey; an interview with Bloomberg’s global head of sustainable business and finance; and a recap of financial reporting and auditing developments from the AICPA conference.
As a new administration settles into the White House, many are trying to predict what changes may await the corporate governance landscape. But predictions recently have proven to have little value for national and international political outcomes. Instead, when it comes to engaging with shareholders, boards would be wise to stay the course rather than to digress.
The demands on the board’s time and agenda continue to mount as a host of critical issues—from cyber risk and business model disruption to investor scrutiny and regulatory demands—collide and reshape the landscape.