Boards will need to hire sustainability experts – and soon.

It seems everywhere you look these days the talk is of ESG, or environmental, social and governance. A commonly used argument is that improving ESG performance has beneficial effects on the product markets (consumers care about ESG), on the labor market (ESG helps retain and attract talent), and on the financial market (investors increasingly demand…

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Cybersecurity, Personal Data and the Board

Managers are in the midst of a perfect storm where a number of cyber issues need attention. Because digital technology is now integral to most companies’ activities, all board members need to possess digital savvy. This post is a first step in understanding some of the fundamentals.   IT Governance Spencer Stuart, a global executive…

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How are ESG metrics tied to Executive Compensation?

Companies have started to tie compensation to various ESG metrics. Earlier this month Papa John’s pizza announced it would evaluate executives’ progress toward material ESG priorities. UBS, Caterpillar, Apple and Trane have made similar moves. And in April, Mastercard announced it would extend its executive compensation model – which ties bonus pay to ESG goals – to all of its…

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Boards and CEO Activism

Howard Schultz, founder and former CEO of Starbucks once said: “You can’t create emotional attachment if you stand for nothing.” And yet, corporate social advocacy remains controversial. When a CEO speaks out directly with the public about a current social topic – but one that is not directly related to the core business they lead…

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Why Compliance with the Law is Often not Enough

When we talk about ethics, what do we mean? And how does it differ – or relate – to compliance? Often we’re simply talking about good decision making when we talk about ethics. It’s hard to come up with a business decision that doesn’t involve deciding what would be a morally good path forward and…

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How Boards Implement DEI in 2022

Despite progress in the last few years, changing existing board demographics will likely take years at current rates. Here’s what your board needs to think about. The recognition for greater diversity and equity on boards has come from direct pressure on three main fronts: regulatory quotas, listing exchanges and institutional investors – see my February…

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ESG Ratings and the Board

Talk of ESG seems to be everywhere but are boards saying “enough”?  According to Morningstar, ESG or sustainable funds grew to almost 400 in 2020, up 30% from 2019. But, as we come close to the end of 2021, ESG seems to be dropping from the board agenda according to a recent survey by Diligent.…

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What do Activists Look for When Targeting a Board?

Activists focus on certain board of director vulnerabilities and target those companies who have them. And while the pandemic brought a number of environmental and social issues to a head, there are certain red flags – mostly relating to a board’s composition – that attract shareholder activists. Because the board has an obligation to address…

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Who is Governing the Firm – Companies or Investors?

There’s no doubt that proxy voting is a time-consuming and often challenging process. Proxy advisory firms saw a need to serve a new market by helping institutional investors navigate the vast amounts of proxy votes on a myriad of issues. Now, that market is both large and powerful. It’s dominated by Institutional Shareholder Services (part…

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What are the Barriers to Board Refreshment?

Board refreshment continues to be hotly debated. But discussions about what it means, and how boards do it, vary considerably. Governance experts generally agree it involves the potential for complacency and a lack of director independence. As noted by Institutional Shareholder Services, “While shareholders, directors, and other market constituents vary as to the reasons for…

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