A revolution is gathering momentum in corporate boardrooms. Accelerated significantly by the Covid-19 pandemic, governance is beginning to break free of the shackles of tradition and starting to transform into the more agile, flexible discipline that today’s businesses need. Enabling this shift are digital tools that meet the enduring need for security and collaboration that has always accompanied successful board operations.
Covid-19 has undoubtedly been the catalyst. With in-person board meetings off the agenda, but the need for leadership critical as businesses faced the biggest crisis for a generation, adaptation was crucial. As entire organisations shifted to video calls and digital data sharing, even the most formal and traditionally run boards had to do likewise. Boards that had previously resisted allowing directors to attend meetings remotely found that it was possible to be equally, if not more, productive when dialling in from home.
However, operational changes are by no means the only challenge facing boards right now. Far from distracting from wider issues, the pandemic has, in fact, amplified awareness in topics from climate change to social justice. The unequal distribution of the pandemic’s worst effects has caused public interest in fairness, government and corporate responsibility to rise.
In particular, the highest levels of corporate governance have been scrutinised for their lack of diversity, meaning boards need to examine strategically who they are, as well as what they do, to ensure that they are best positioned with a mandate to lead organisations through this unprecedented period.
A faster pace and heavier workload require a new approach
The multiple pressures of the pandemic – which also precipitated an escalation in cyber security risk as malicious actors capitalised on disruption – resulted in a huge increase in workload for board members. Businesses are now asking more of their boards, and directors are under pressure to deliver.
Directors and executive teams now need more data, more frequently, to ensure that the decisions they make are robust. Any governance gaps resulting from incomplete knowledge can threaten the business’s ability to build sustainable value for all its stakeholders, which is a strategic risk in today’s environment. Having a more holistic view of an organisation and understanding the impacts it has on shareholders, customers, suppliers, employees and communities is fundamental to corporate success.
Ensuring that boards can access the insight they need, when they need it, requires a continuation down the path that the pandemic has pointed toward. Modern governance is the evolution of leadership, board and operational practices to drive sustainable performance, investor confidence, stakeholder engagement and long-term impact. It is underpinned by secure technology and relevant insights drawn from accurate, credible sources.
Modern governance as a competitive advantage
Digital transformation has been the watchword for businesses for the past decade, as companies sought to realise the agility and flexibility it delivers. Those advantages can now be elevated to board level and translated into competitive differentiators.
Diligent’s pioneering modern governance platform, for example, brings together disparate tools, data, integrations and processes and serves them up in a secure central location so directors can focus their governance activity. The three solution areas are board and leadership collaboration, operational governance, and advanced governance analytics.
Directors and C-suite executives can access the modern governance platform from any location and through any device, while the highly confidential data they are accessing is protected to the highest cyber security standards – no more meeting packs emailed to directors’ personal accounts, or weighty board books distributed by courier.
These collaborative operational support tools are complemented by the integration of curated industry, regulatory and market insights from a diverse range of sources – both inside and outside the organisation. These allow directors to achieve that comprehensive view of the business and the environment that it operates in so they can make decisions at the pace required.
The more frequent the cadence of insight available to directors, the better positioned they are to anticipate future crises, something that is understandably a top priority right now. And while not every threat or crisis will have the scale of a pandemic, businesses will always reap advantage when senior leaders can see further down the track to identify risks and opportunities.
Adapting for the ESG era
Data and insight also has a pivotal role to play as boards and businesses adapt to an era when they are no longer judged on traditional metrics. Environmental, social and governance (ESG) is in the ascendancy as evidence increasingly suggests that organisations with strong performance in these areas have demonstrated greater resilience during the pandemic. With more investors following the lead of Black Rock CEO Larry Fink and becoming prescriptive in their expectations around ESG as the importance of sustainable value creation becomes clear, boards cannot afford to be on the back foot.
There is a clear requirement for business to monitor and report on key ESG metrics and identify areas for improvement. Modern governance tools such as Diligent’s ESG solutions can help establish a framework that ensures this information flows to the board and C-suite.
Governance responsibilities and processes will continue to accelerate in the years ahead, which will change expectations around board business. Businesses can expect further pressure from regulators and activist investors as ESG issues take centre stage, while the needs of employees and communities will also be a key consideration.
To effectively manage the changing dynamics in an organisation, leaders need more information at a more frequent cadence. The role of the board member is not something that just happens four times a year, it is an ongoing monthly, if not weekly, role because people have to be more prepared with, and informed by, company and wider industry insights to be good stewards of the organisations whose boards they sit on.
Nathan Birtle is SVP sales, EMEA at Diligent.