Russell Reynolds recently published its second annual Global and Regional Trends in Corporate Governance for 2017. The whitepaper outlines the forces and factors that are likely to impact boards in the coming year and reflects the input of institutional and activist investors, pension fund managers, public company directors and other governance professionals.
Boards in 2017 will face a wide range of pressures: political uncertainty arising from the surprise Trump and Brexit victories, an increasing global convergence of corporate governance norms led by institutional investors, and greater scrutiny of a company’s strategy for long-term value creation led by institutional investors and activists.
As a result of these pressures and as further discussed in the report, Russell Reynolds notes that public companies are likely to face the following trends in 2017:
- Changing expectations of directors: Increasing expectations around the oversight role of the board, to include greater oversight of strategy and scenario planning, investor engagement, and executive succession planning.
- Spotlight on composition and refreshment: Continued focus on board refreshment and composition, with particular attention being paid to directors’ skill profiles, the currency of directors’ knowledge, director overboarding, diversity, and robust mechanisms for board refreshment that go beyond box-ticking exercises.
- Push for long-term value creation: Greater scrutiny of company plans for sustained value creation, as concerns increase that activist settlements and other market forces are causing short-term priorities to compromise long-term interests.
- ESG goes mainstream: Greater focus on Environmental, Social and Governance (ESG) issues, and in particular those related to climate change and sustainability, as industries beyond the extractive sector begin to feel investor pressure in this area.The report also includes region-specific analysis for the US, Europe, India, Japan and Brazil.