In the last year, there has been a broad shift in corporate governance focus towards social issues, including human capital management – the ‘S’ of ESG.
The proxy voting adviser Glass Lewis notes majority support for a record number of such proposals, including on diversity in the 2020 US proxy season, and this focus is set to continue following human capital management disclosure rules announced by the Securities and Exchange Commission last autumn.
CEO pay has come under the spotlight this AGM season as investors have taken a dim view of companies that have benefited either from government subsidies or employment support/furlough schemes, but failed to appropriately modify executive pay to reflect that.
Recent calls for racial equity and government regulators' increasing focus on social and environmental concerns make this a good time for companies to integrate environmental justice into their environmental, social and governance efforts, say independent consultant Stacey Halliday, Julius Redd at Beveridge & Diamond and Jesse Glickstein at Hewlett Packard.
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When liberalism was young, it had great faith in markets specifically, the ability of markets to ease social conflict. The theory had a French name, the
doux commerce thesis, and it went like this. Trade would encourage people to set aside tribal attachments and disagreements on big questions so that they could make money. Why argue about religion and politics when doing so could get in the way of business? As people became wealthier, the theory maintained, they would care less about divisive identities and issues; personal relations would thus become more tranquil and productive. This virtuous cycle would work both domestically and globally, creating greater peace and prosperity both within and among nations.
Farmers are active members in many types of organisations, acting as directors on charitable boards in their communities, schools and of course co-ops as well as other agricultural companies and groups.
Unfortunately, in recent years, failures in corporate governance has caused scandal for many charitable organisations.
It is therefore not surprising that an increased regulatory burden has been imposed on organisations. This has added to the costs and complexity of overseeing and managing a business and has brought new challenges from an operational, regulatory and compliance perspective. With this, the role of directors has also become more complex.
Directors and potential directors need to be clear as to what their duties are, and also on how a board should behave, so that it can be at its best.
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