5 key ways to better engagement with boardsCuffelinks
Morrow Sodali has released its fourth annual Global Institutional Investor Survey which includes feedback from a third of the world’s assets under management representing $33 trillion gathered from 46 respondents, including several domestic funds.
The results confirm that 2019 will be another year of transformative change as investors step up engagement to better understand the alignment between board composition and business strategy, especially in the way the board oversees corporate culture and the ‘tone from the top’.
Increasing role of non-financial factors
In light of the report from the Hayne Royal Commission, these findings reinforce the increasing importance of non-financial factors in assessing a company’s performance and corporate behaviour.
Investors want to engage with boards regularly throughout the year and they also want more substantive information about board composition and business strategy. They want clearer explanations on governance and executive remuneration. They also want an integrated narrative that explains environmental, social and governance practices in terms of business risk and sustainable financial performance.
Many investors are moving away from box-ticking and compliance checklists which is good news for companies. It gives companies greater flexibility to explain policies in terms of their specific business conditions and strategic goals. But a deeper dive by investors into companies’ strategic decisions increases demands on the time and attention of directors, requires much greater transparency and needs to consider the continuous disclosure obligations.
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