Corporate governance trends in Spain


Back to Global Corporate Governance Trends for 2024


ESG erupts in the board scene

As ESG enters the boardroom, many boards have introduced specialized sustainability or CSR committees to provide oversight. This has raised discussions regarding the board’s role in ESG oversight versus that of management, particularly when it comes to operational aspects that traditionally sit within executive teams. Committee chairs will be tasked with prioritizing discussions on the strategic and risk implications for the enterprise, while tapping into internal and external sources for guidance. Boards—particularly those that are unfamiliar with institutional investor expectations—are undergoing trainings on topics like gender diversity. Though the “S” of ESG is only beginning to gain more attention, particularly as it relates to reputational risk, boards will increasingly be expected to demonstrate their understanding and oversight of the ESG framework.


Spotlight on nominating committee role in succession planning

While nominating committees have traditionally been responsible for overseeing succession planning for the board, CEO, and chairman, there is growing tension regarding how active their role should be in broader executive succession planning. While regulations leave room for the nominating committee to play an active role in broader succession planning, management teams perceive this as overstepping. Boards with stronger governance practices are seizing the opportunity to review, align, and define the scope of their nominating committee as it pertains to broader talent management oversight and succession planning.


Rising influence of proxy advisors

With increasing demands by institutional investors on governance, board and committee leaders are engaging more with proxy advisors (often via the nominating committee) to better understand their priorities and expectations. This enhanced shareholder engagement and stewardship is helping some boards stay on top of the hot topics that continue to gain attention from shareholders and have bearing on how they vote. The director nomination process, shareholder rights, and overboarding are all likely to be on the table, with the looming reality of negative votes from dissatisfied stakeholders. Remuneration committees will face ongoing pressure to demonstrate their rigorous oversight of compensation policy and benchmarking.


Developing regulatory frameworks aim for gender parity & improved evaluations

The new government has pushed for an expansive parity law that, if passed, will have a bearing on the makeup of boards and the pool of candidates. Though women’s representation on boards is strong among the Ibex 35 (39% gender diversity) and the General Index (31%), the newly proposed law will impose a mandate dictating that 40% of boards be comprised of women. This potential requirement is already spurring action, most visibly in recent recruitments of specialized subject-matter or functional directors who bring specific insights, as well as increased rates of gender diversity.

While gender tends to dominate the discussion on board diversity, Spanish boards are also thinking about diversity in terms of geographic, cultural, and skillset diversity. An increasing number of directors are appointed from financial services, the public sector, and consulting. With 20% of Spanish board members coming from other countries (usually within Europe), we expect to see further nationality diversity in the coming years.

The board evaluation process is mandated annually for public company boards (with an external evaluation held every three years.) The rigor, quality, and approach of these processes are highly divergent among boards, and the benefits of individual director assessments are not yet culturally or broadly accepted. Nevertheless, advanced boards are leading the charge by incorporating peer feedback into their director reviews.  This is resulting in an observable knock-on effect, as an increasing proportion of nominating committees and board leaders are discussing their board’s culture and director’s behavior.


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