Remits revisited?

To US boards and news that non-executive directors appear to be sticking their oars into operations matters like never before. According to research from headhunters Heidrick & Struggles, looking at US boards, 25% of those polled believed non-execs are “more operationally involved than ever before”, with 45% saying it happens “occasionally”.

Heidrick’s report, Board Monitor US 2024: Navigating Shifting Sands, says: “Few dispute that more is at stake and more is expected of directors now.

“As the role of business in society expands, directors have been grappling with the boundaries of their respective roles.

“This has accelerated since Covid and is testing the sacrosanct ‘nose in, fingers out’ standard that marks an important boundary between the board and management in ways we have not seen until recently.”

Why would this happen? Apparently, chief executives believe it’s because non-execs want to learn more about operations. Non-execs say it’s because they have “specialise knowledge” missing from the executive team.

However, around 14% believe the boundaries are crossed when the CEO “doesn’t have bandwidth to handle increased responsibilities”.

This is interesting when you look at the topics on which boards are spending more of their time. The biggest area is AI where a mighty 71% of board directors have increased their attention and, in second place, cyber risk, where 62% have upped their commitment. By comparison, geopolitical risk (there’s a war going on) is the fifth most likely topic to demand more focus (56%), followed by sustainability (54%). Enough said.

Keeping it Rio

Bleak news for the London Stock Exchange this week, despite an upbeat speech from CEO Julia Hoggett.

According to the Financial Times, investor Palliser Capital is calling for the world’s second largest mining outfit, Rio Tinto, to move its primary listing back to Australia, leaving the FTSE 100 and ongoing controversy about why London markets appear to be losing out to other stock exchanges.

The FT reports Palliser claiming that Rio Tinto is trading in London at a $27bn discount to its listed Australian entity.

This week, Julia Hoggett gave a speech in which she tackled negative views of the City (while, at the same time, claiming things have got to change because, well, London needs to be more competitive).

Hoggett was, it has to be said, talking about comparing London and US valuations, but said there was evidence some UK-listed companies are trading at “higher multiples” than US counterparts.

To be fair, Palliser believes it’s Rio Tinto’s “clunky” dual-listed model that’s at fault. Even so, if the miner goes, it will be another blow to LSE. No doubt it will have many thinking boards wondering if their listing might be better off elsewhere. Cue lobbying and long lunches.

Honourable intentions

If you follow Board Agenda, you’ll know that big European companies, and those with divisions inside the EU, are coming to terms with CS3D, the Corporate Sustainability Due Diligence Directive.

CS3D is a demanding piece of legislation that demands companies report on environmental and human rights abuses in their supply chains and how they’ll put things right if they wrong.

Well, one academic team writes that it might be misguided and the “self-auditing” it involves is unlikely to achieve the noble aim of improving conditions in developing countries.

Stephan Schmid and Chris Thomale, of the University of Vienna, write: “The intention to improve living conditions in the global South and to hold the global North accountable for this is understandable.

“However, the end does not justify the means. It is doubtful whether the proposed self-auditing by companies and the associated civil tort liability are effective means to that noble end.”

We’ll have to wait and see.