Last week, Meraki Executive Search & Consulting was delighted to host a discussion on the ‘Future of Corporate Governance’ as part of the Meraki Leadership Series, with our fabulous partner HSBC.
This is an essential discussion, as a new model of corporate governance is emerging and companies are not just being encouraged to define their sense of purpose, but (in the words of BlackRock’s Larry Fink) must “serve a social purpose” and show they are making a “positive contribution to society”.
Our esteemed panel, including Donald Brydon, Chairman of the London Stock Exchange, Dr William Fung, Chairman of Li & Fung, Teresa Ko, China Chairman of Freshfields Bruckhaus Deringer and moderator Angie Lau, Chief Narrator, Narramur, debated the topic. The very fundamentals of business were brought into question, as arguably most companies are too focused on short-term measures to the detriment of their long-term impact on wider society. The differences between governance standards in Hong Kong and China versus the UK and Europe were also discussed.
The conversation was centred about the news that HKEx recently strengthened its corporate governance code provision, which will be effective from 1st January 2019. This provision highlights a need to fortify the transparency and accountability of boards, enhance the criteria for assessing and appointing iNED’s, and promote more diversity (for more information please see HKEx).
Key insights from the panel:
- Greater pressure on Independent Non-Executive Directors
The panel agreed there is already a great deal on the shoulders of iNEDs, and increasing regulation, caused by the push for better governance, is only serving to make the role harder.
- Strategy is an essential part of the board’s role
Boards must ensure they set aside enough time during meetings to thoroughly scrutinise and examine the strategic direction of the company, as a core component of corporate governance standards. For listed companies in the UK, Europe and Hong Kong, the strategic discussion is a fundamental part of every board agenda, but there is room for improvement on the boards of some companies in other jurisdictions.
- Cybersecurity and digital on the board agenda
Cyber challenges confront every board and are now considered one of the top agenda items – therefore board members need to have an understanding of the potential business impact. This is an area of development for many board members, but it also presents an opportunity to bring in fresh talent to fill the gap in the board’s digital capabilities.
- The business case for diversity
The role of women (and diverse talent in general) in changing corporate culture – injecting new perspectives and insights to prevent group think and challenge the status quo.
- Enabling more women to reach the board
The management of the female talent pipeline is fundamental to ensuring more women are represented at senior management and board levels. In the UK for example, great strides have been made and women now represent 28% of board roles. However, there is a critical issue with the talent pipeline, in particular how promotions are managed. We need to level the playing field and overcome our personal unconscious biases to ensure the best talent has the opportunity to reach senior positions.
- Environmental, Social and Governance (ESG) reporting
There are changing reporting requirements in measuring the sustainability and ethical impact of a company. ESG commitments are heavily influenced by the general outlook of a company, with many being too focused on short-term measures to the detriment of the long term. The dangers of quarterly reporting were also discussed, potentially blinding companies to their long-term impact.
- The need for business purpose
Larry Fink (Chairman and CEO of BlackRock) recently sent out a strong message asking for businesses to show accountability to society, in addition to other stakeholders. A purpose-driven strategy has a key role to play in corporate governance standards. Ensuring a team is aligned around a common purpose ensures employees and business representatives feel a greater sense of ownership of their actions.
- Desirable board director qualities
Flexibility of thought (open to new ideas), judgement, balance, courage and curiosity.
We were joined by an engaged audience of regional Presidents, Board Directors, Chairmen, C-suite members and a number of alumni from the Women’s Directorship Programme.
Thank you to everyone who came and joined in this essential discussion. We look forward to hearing your insights on this topic to continue to raise the standards of corporate governance across Hong Kong and the wider APAC region.
For more information on the Meraki Leadership Series please get in touch with the team via sophie.gray@merakiexecutive.com.