Investors call for more diverse boards
More activist positioning is expected to grow this year, report says
The Valor Econômico article, “Investors call for more diverse boards,” quoted Russell Reynolds Associates Consultant Jacques Sarfatti and highlights our paper, "2021 Global and Regional Trends in Corporate Governance." A translated excerpt of the article is below.
More activist positioning of investors regarding gender diversity, climate change and purpose beyond profit, among other aspects, appear in a new report by Russell Reynolds. The consultancy talked to more than 40 global institutional investors and activists, pension fund managers, proxy advisory companies and corporate governance professionals and identified six trends that will impact boards and directors in 2021.
The first of them points out that, if the pandemic pushed the “S” (social) of ESG to the top of the corporate agenda then, in 2021, climate change “will be back in the spotlight”.
Working with diversity remains the priority for all regions covered by the survey. The third trend is related to the need for boards to adapt to assess sustainability reporting standards (which should converge amid the proliferation of standards in recent years), as they will begin to be more accountable for these metrics and results by stakeholders. "This year the trend for large investors to look at ESG continues, but now I see less patience from them, being more incisive and with a higher threshold, when it comes to evaluating where to invest," says Jacques Sarfatti, Russell Reynolds Associates Consultant.
Boards will also need to look more carefully at human capital management, with increased expectations regarding the disclosure of data such as gender disparity, security incidents and employee turnover, according to the report. The fifth trend is about a question that investors will ask the boards more emphatically: “What is your obligation to drive even more value creation, even when the company is performing well?” Finally, there is the finding that virtual meetings are efficient after a first chaotic phase (at least in Brazil) and there is evidence that they are here to stay. "Online board meetings made it possible to attract profiles from other regions, something that was more difficult in the past," says Sarfatti.
To access the full article in its original Portuguese, click here.