2021 Global and Regional Trends in Corporate Governance


Harvard Law School Forum on Corporate Governance | March 3, 2021

The Harvard Law School Forum on Corporate Governance article, "2021 Global and Regional Trends in Corporate Governance​," was written by Russell Reynolds Associates Consultants Anthony Goodman, Rusty O'Kelley and Laura Sanderson, based on their paper of the same name​. The article is excperted bel​​ow.​


This year, as in the previous five years, Russell Reynolds Associates interviewed over 40 global institutional and activist investors, pension fund managers, proxy advisors and other corporate governance professionals to identify the corporate governance trends that will impact boards and directors in 2021.

Global Trends Predicted for 2020​

  1. ​​Greater focus on the E&S of ESG
  2. Increasing importance of corporate purpose
  3. Better board oversight of corporate culture and HCM
  4. More expansive view of board diversity that includes ethnicity and race
  5. Companies facing wider forms of activism
At the time of publishing last year’s paper in January 2020, we could not have known just how painfully relevant many of the trends we predicted would turn out to be:

The COVID-19 pandemic and social justice movements have had far-reaching impacts on business and society around the world. In many ways, we are at a turning point. Corporate governance trends vary somewhat across regions, but corporations globally are experiencing a reckoning around their role in society. The expectations of the independent directors who oversee corporations have never been higher.​

Global Trends Predicted for 2021

  1. Climate Change Risk
  2. Diversity, Equity & Inclusion (DE&I)
  3. Convergence of Sustainability Reporting Standards
  4. Human Capital Management
  5. Return of Activism and Increased Capital Markets Activity
  6. ​Virtual Board & Shareholder Meetings: Here to Stay
1. Climate Change Risk. The pandemic forced the “S” of ESG (environmental, social and governance factors) higher up the corporate agenda as companies sought to reassure stakeholders that they took the safety of their workers and communities seriously. In 2021, climate change will be back in focus.

Corporate responsibility for managing climate change as a long-term, material financial risk has gained traction in markets that have previously resisted it. That the Biden administration in the US rejoined the Paris Climate Agreement on its first day in office reinforced that. Commitments to carbon net zero by 2050 are widespread and creating pressure on peers (both companies and governments). In his 2021 letter to CEOs, BlackRock’s Larry Fink set expectations for companies to disclose how their business plans incorporate net zero by 2050 and how these plans are reviewed by the board. [1] Boards should also pay close attention to the decisions and outcomes of the 26th United Nations Climat​e Change Conference (COP26) in the UK in November. We also are keeping an eye on investors (and companies like Unilever) starting to support a new investor “Say on Sustainability” vote.

2. Diversity, Equity & Inclusion (“DE&I”). Our number one trend for the US this year is also a hot topic in other regions (including the UK and Canada) though not yet in the EU. The murder of George Floyd in the US and the subsequent protests resulted in a collective awakening in many countries around the world, causing social and racial justice issues to gain unprecedented attention. As a search firm active in placing diverse candidates, we are seeing increased demand for racial and ethnic diversity at the board, C-suite and employee levels, as well as increased investor demands for disclosure of key data on diversity, equity and inclusion. Gender diversity remains a priority in all the regions covered in this paper.

Convergence of Sustainability Reporting Standards. The global effort to identify and report material ESG risks has resulted in a proliferation of reporting standards, with many investors preferring standards such as SASB and GRI. In 2020, the authors of the major sustainability disclosure standards and frameworks announced a statement of intent to work together to create a comprehensive corporate reporting system. Investors will soon be able to gather a complete and comparable view of a company’s material risks (including ESG). As with many of the trends this year, we expect private equity firms and other private companies to also increase their focus on ESG. All boards should expect to start being held more accountable for sustainability disclosure by their stakeholders.

3. Human Capital Management. The largest institutional investors continue to increase their expectations around board oversight of human capital management (HCM) and corporate culture. As part of the economic fallout from the pandemic and the social justice movements in many regions, demand for disclosure of more HCM data (e.g., gender pay gap, safety incidents, employee turnover) has skyrocketed. This year, many investors and proxy advisory firms plan to support more shareholder proposals on this topic and hold directors more accountable for insufficient disclosures.

To read the full article, click here.​

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2021 Global and Regional Trends in Corporate Governance