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Back to Global Corporate Governance Trends for 2024
Increased relevance of the S in ESG
2024 is expected to be a critical and decisive year for Mexico’s political and economic landscape. The largest general election in history will take place in June, with considerable polling suggesting the likelihood of the election of Mexico’s first woman president. The heightened extremism in politics and the discourse surrounding the implications of the election has risen to the top of board agendas. The upcoming government transition has elevated boardroom discussions on organizations’ societal responsibilities, with calls for businesses to contribute to the broader stakeholder community in their respective cities, states, and Mexico overall.
The corporate governance scenarios and outcomes of the upcoming election are taking center stage in board meetings, as directors are expected to increasingly consider their stance on social initiatives, employee sentiment and sensitivities, and government affairs. The multi-dimensional discussion of social issues has never been so prevalent within the boardroom agenda. Given the strong prospect of a new administration, we expect that the “S” will continue to gain more traction and attention from the board.
Growing demand for diversity beyond gender
Mexican boards have shifted the diversity discussion beyond gender. After a timid start in 2022, corporate boards have been increasingly adding more non Spanish-speaking board members to their ranks. We expect this trend to continue accelerating in 2024. From holding committee meetings in English to discussing the need to change official board meetings to English, there is a clear interest in driving additional diversity and geographic representation in the boardroom.
We believe that this trend is predominantly driven by the push for more digital and tech savvy skillsets into the boardroom, as well as adding a broader North American perspective, given the reshuffling of supply chains post-Covid. It is clear that boards are thinking more about how to reshape their director mix with a convergence of subject-matter skills, international perspectives, cultural and social diversity, and generational balancing.
Greater accountability of and scrutiny on private boards
The notion that private boards have more leeway and receive less inspection than public boards is dissipating quickly. The generational changes taking hold in many privately-held companies is mounting additional scrutiny and pressure to enhance transparency and accountability among private boards.
Prospective board members considering joining a private board should anticipate more interest in developing the meeting agenda, refining board processes, and enhancing the quality and rigor of strategic dialogue in the boardroom. Private boards’ prioritization of these issues has grown significantly in past years, and is likely to be a top focus in 2024. Though there is still a prevalence of advisory boards in Mexico (wherein the fiduciary responsibilities of directors is reduced), independent board members are increasingly carrying the expectation to demonstrate sound corporate governance practices as their public board director counterparts.
Push for more structured CEO succession processes
In 2024, boards will see a continued push for more systematic, orchestrated, and forward-thinking CEO succession processes. This is especially true in family-owned businesses, where capital providers are fueling the need for these founders (or legacy families) to address CEO succession in a proactive manner. We are seeing an uptick in investors requiring structured CEO succession processes. This is spurring families and founders to proactively discuss possible successors, conduct market benchmarking, and engage earlier with external advisors to guide them on best practices to facilitate a smooth transition when the time comes.