Winds of Change

A new decade marks a good time to reflect upon the changing governance landscape

With January heralding the start of a new year, it is a good time to reflect on the significant changes that have happened in the field of governance. More importantly, we can consider what changes might face us in the coming years.

Ten years ago, the financial crisis increased public awareness of the impact that board behaviours, culture, effectiveness, decision-making and performance can have on a company. The failure to protect the interests of shareholders, employees and broader stakeholders led to the strengthening of corporate governance codes and company legislation around the world to the highest levels ever seen. Efforts to ensure that boards and their directors discharge their stewardship duties effectively have been mirrored in other parts of the economy.

Governance is now firmly on the map and this has led to a huge increase in the amount of work that our members do. Challenging conditions in recent years mean that every sector has faced unprecedented levels of competition, reduced barriers for new market entrants, major business model and technology disruption and volatile geopolitical considerations.

Boards have changed and both the need and expectation is that they will do more now than simply provide oversight. They need to bring fresh, innovative thinking to the table and understand the impacts of competitors, customers and disruptive trends. Our members support boards by ensuring that there is time on the agenda for them to do this. In turn, we support our members by providing them with new thinking about governance, for example the three pieces of thought leadership launched at this year’s annual conference: A View at the Top, Building a Balanced Board and The Future Board.

We are increasingly supporting our members throughout their careers by making improvements to our core offer, expanding our remit to include the sport, not-for-profit, health service and education sectors; producing qualifications and guidance for all of the sectors in which we are active; strengthening our main qualification and developing a Competency Framework for Governance Professionals.

Driving, adapting and shaping to changes in the governance landscape is another important area of focus. Most recently we helped to shape the revised UK Corporate Governance Code and the Wates Principles, and launched a consultation into the effectiveness of independent board evaluation in the UK listed sector.

We have also responded to consultations on stewardship, audit, Scottish Charity Law and NHS governance. The resulting new legislation is likely to have a significant impact when it finally reaches the statute book and, as the governance world becomes more integrated, we expect to see these developments spread across sectors and jurisdictions.

ProShare has continued to be influential in the employee share industry, launching its annual SAYE & SIP report at the House of Commons. This report is the only one of its kind in the UK share plans market and is the ‘go-to’ benchmarking tool for plan issuer companies, as well as their advisers and providers.

Our recent name change emphasises the support that we provide to the global governance community, reinforcing the point that we are the only professional membership body able to award chartered status to company secretaries and other professionals working in the field of governance. Increased recognition of the importance of good governance means that there is no shortage of opportunities for us to partner and collaborate with other bodies.

Finally, a quick word on the areas that I see as being of importance in 2020 and beyond. The move away from shareholder primacy to a much broader focus on all stakeholders has been one of the most dramatic shifts in recent years and features, to a greater or lesser extent, in many of the major party manifestos for the forthcoming general election.

The increased political and public focus on ESG will require a radical shift in how boards deliver value by investing in employees, dealing fairly and ethically with suppliers and supporting the communities in which they operate. We and our members will have a key role to play in supporting organisations to achieve this.

As our 2018 Next Generation Governance report showed, technological change, environmental sustainability, financial inequality, regulatory scrutiny and emerging social issues will all have an influence on the governance agenda in the coming years. Employee engagement and diversity will remain important areas of focus in an era where a job for life and unstinting loyalty to an employer is no longer the norm.

As for the Institute, our members drive all that we do and this year we carried out our first membership survey since 2014 to inform a review of our member value proposition and inform wider strategic planning. 2020 looks set to be another busy year.

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