Sophie L'Helias, Senior Fellow, Governance at Governance Board chaired a very interesting panel discussion. The panel was asked to discuss whether corporate governance had progressed or regressed over the last twenty years (since ICGN was formed). The opening observation was that much had changed, yet much remained the same:
  • Investors hold more power now than they did twenty years ago. Shareholders—institutional investors in particular—now know they can exert influence and many are starting to take this role quite seriously.
  • While activism brings its own challenges (including battles during proxy season), the notion of trying to hold a company and its board accountable for company performance is something institutional investors and smaller shareholders are increasingly aware of.
  • Transparency, accountability, fairness and responsibility are four key principles that feature more often now than in the past. However, the application of such principles is by no means universal.
  • The conceptualisation of corporate governance remains, in the main, one of a policy framework within which shareholders seek to exert influence over performance and outcomes. [note: In this regard, the investor community seems to be some distance behind the research that suggests corporate governance is far more than a structure or a process or a policy framework.]
  • Calls for 'responsible investing' and responsible use of the three capitals—financial (money), human (people) and natural (environmental)—are much more prevalent than ever before.
This first panel session of the conference provided an interesting opening play, upon which later discussants could build (or otherwise!). The main takeaway for me was that shareholders and boards need to 'grow up'. Looking over the fence at each other (and, in some cases, simply ignoring each other) is not a healthy context for either productive ownership or effective control. Boards were created to bridge between owners and managers, yet many boards seem to be far more interested in pursuing their own interests and priorities (than acting in the best interests of the company or the shareholders). While we appear to have come far, we still have much to learn.