It’s the end of the year, time to take stock, consider what has passed and perhaps draw a few lessons. No less so in corporate governance. Board Agenda has covered scores of stories over the past 12 months, but perhaps more interesting than the decisions of our editorial team are the interests of our readers.

Which stories grabbed your attention as we worked our way through the 2021 agenda? ESG, gender and ethnic diversity, artificial intelligence, corporate purpose, and coping with change forced by the Covid pandemic were among the compelling topics that caught and held our readers’ attention. Here’s a review of the most popular stories, in no particular order.

Company purpose is more than marketing slogan—it’s a new philosophy  (May)

Three major issues dominated discussion of governance in the past year: the pandemic, sustainability or, more precisely, climate and, closely related, corporate purpose. Indeed, we wrote purpose might be the most “fundamental” issue in governance. “At this stage it’s hard to see that the purpose movement might go away. After all, the climate crisis isn’t going away. Perhaps the only real question is how successful it might be and how quickly the word will spread.”

Why ESG strategy is a complex corporate challenge for boards (February)

Paul Kearns looks at the challenge of integrating ESG into corporate strategy and how to define measures of “stakeholder value”.

“The reality of ESG is that it represents the most complex corporate challenge that you have ever faced; or are ever likely to face. ESG is a fundamental break, a discontinuity, in the historical continuum that we have come to regard as capitalism. ESG requires nothing less than an absolute transformation of your company,” he writes.

Does diversity deliver? We don’t know yet—and here’s why  (October)

In a set of frequently quoted studies, McKinsey’s, the consulting firm, argue that there is a strong positive relationship between financial performance and racial ethnic diversity.

Diversity on boards is right and proper and a necessity in the modern world. But, Jeremiah Green and John RM Hand argue that McKinsey’s result cannot be replicated. They conclude more work is needed.

“Whether done by academics or practitioners, there is likely great value to be gained from future research that seeks to empirically identify and measure the directions and magnitudes of the causal relations between racial/ethnic diversity and firm financial performance. And not only for large firms such as those in the S&P 500, but across a wide variety of companies, both in US and international. This would bring into sharper focus the benefits/returns and costs/risks of racial/ethnic diversity, not only with regard to firms’ executives, but their boards of directors, rank-and-file employees, and other key stakeholders.”

Boards need dedicated ESG committees ‘as part of company strategy’  (November)

A report for the UK’s Institute of Directors argues that for ESG to be at the centre of corporate governance it requires its own board committee. Margaret Casely-Hayford writes a special committee would fill the ESG gap left by the current formulation of directors’ duties.

“In the absence of such a duty, it behoves a company that wants to realise any capital value that may be derived from sustainability to embed ESG strategy and an accountability structure that’s driven by the board, or a dedicated committee, as part of the overall strategy of the company formally within the enterprise.”

Board transformation 2021: leadership in transition (October)

A special report on the way boards have so far been affected by the pandemic. Have they kept pace with transformation? How well equipped are they to deal with changing operational, strategic, technological, financial and ESG issues?

The report reveals a “boardroom community that is embracing change, increasing oversight of employee issues, focusing on the long-term resilience of the organisation, and giving equal weighting to risk management on the one hand and the opportunities for digital transformation on the other.”

Beyond Covid: risk and resilience among governance trends for 2021  (January)

In January we looked ahead at the coming year. Were our forecasts accurate? You be the judge.

 

 

Top 150 UK firms have more women than men in non-executive roles  (December)

The headline is self-explanatory and marks a milestone in the campaign for better boardroom diversity, according to a report from Spencer Stuart. But it wasn’t all good news. The number of women in executive roles still lags.
“Non-executive diversity needs to be matched with progress at the executive level to truly realise the business benefits of ‘diversity of thought’ around the the board table that we are all striving for,” says Fiona Hathorn, co-founder of Women on Boards.

Firms forge ahead with AI adoption despite lack of skills on boards (January)

It was January again and our research showed two-thirds of companies would push on with AI implementation within the following 12 months. But there were worries about the boardroom skills and knowledge needed to supervise its introduction.

“Deficient boardroom knowledge and skills is a cause for concern, and links to wider questions about the state of technology expertise on boards—an issue affecting many organisations as digital transformation gathers speed across industry.”

What boards need to know about business transformation (February)

“Transformation” was on the minds of most business leaders as they grappled with the impact of Covid-19 on economic prospects. “Early movers have already indicated they are making permanent changes to their operating models,” write Fin Goulding and Haydn Shaughnessy. So what should leaders do? Goulding and Shaughnessy offered readers a ten-point plan.

Boards ‘lack the right knowledge’ to set effective climate policies (December)

Worrying news that while climate is the dominant issue in politics and policy, boards may not have the skills to turn climate concerns into effective corporate policy.

“The role of the chair may need to be challenged and re-thought in some cases,” said Alice Breeden of Heidrick & Struggles, researchers, along with INSEAD, behind research looking at climate skills on boards. “It’s a such all-encompassing, world-changing issue that you can’t know all there is to know about climate change,” says Sarah Ivory, an expert on business and climate at the University of Edinburgh Business School. “And because it is such a worrying, stressful and, actually, a pressure situation, I think board members are holding back and waiting for someone to tell them what to do.”