Top Issues for Directors

The IOD recently suggest top issues for directors

  1. Culture and conduct
  2. Climate change
  3. Future of Work
  4. Mental health in the workplace and
  5. Compliance that matters.

We find it hard to disagree with any of these. But we’d also like to improve them, in the spirit of building on a good idea! Our picks for 2019:

  1. Bonuses. There is little shareholder or societal support for the kinds of bonuses that boards are signing off. Businesses do not operate in a vacuum. Why is this an issue? In simple terms give good people enough of a financial incentive and they may do bad things (or turn a blind eye). If you need evidence of this, the banking commission findings in Australia are frightening. See our Integrated Report 2018for a provocative article on CEO pay which has had a chorus of ‘well done’ or ‘someone needs to call this out’ approvals from senior directors.
  2. Societal impact. How about a ‘net societal impact’ rating for a business? If boards don’t get onto this, then sooner or later, an activist will. Making money from doing harm is no longer going to be acceptable. Sugar, booze, cigarettes and gambling are the common targets and are unlikely [for good reason] to go away. But it goes wider than that to how you pay your most junior staff, how you treat your suppliers, your generosity in the community in which you operate, your partnerships with government and NGOs around key societal issues. Let’s not forget paying tax too! In other words, as a director are you doing things that your kids/grandkids would be proud of? How is the ecosystem, in the broadest sense of the word, better for the actions of your board?
  3. Purchasing. (A sub-theme of 2). An organisation can make a big difference in how it chooses to spend its money. An individual consumer makes a difference every time they choose between locally made vs imported, organic vs inorganic, fair-trade vs not, plastic wrapped vs not, Nike vs Allbirds, EV vs V8, bus vs car and so on! Businesses spend so much more and they can have a big impact. Examples may include choices on vehicle fleets, corporate catering (e.g. Eat My Lunch), recycled paper, who to employ (e.g. ex-prisoners vs working holiday scheme migrants), the nature of contracts they enter into with suppliers and so on. These all leave a footprint in the sand.

What kind of footprint do you want to leave?

Merry Christmas and Happy Holidays!

Peter Kerridge

Partner

Issues for Boards