Welcome back to your board director newsletter as we look ahead to 2022. 

We are here to help directors keep up to speed on the macro trends affecting businesses across the world, and corporate governance news.

We hope you enjoy it and, as always, email your suggestions for stories and resources to [email protected].


This week, to help you take stock, I wanted to highlight a trio of the editorials you might have missed over the Christmas period – all with messages for the new year.

First, management style is changing: hard-charging macho chief executives are being punished for failing to empathise with staff in a turbulent world; a new generation of "vulnerable" and "authentic" leadership is upon us.

Second, there are glimmering reasons for optimism in our management of the Covid pandemic. The challenge for societies, and for companies, now will be adapting to live with Sars-Cov-2. "Whatever slim chance we might have had at the beginning of 2020 to eliminate Covid-19 has long gone... This year the world will have to build up resilience so that we can live with [it]."

And third, employers need to be aware of the rising power of the worker. "After 40 years in which capital has had the whip hand over labour, is worker power on the rise?" the leader asked. 


It may be a new year, but familiar trends continue to dominate the economic outlook.

In his Senate confirmation hearing on Tuesday, Fed chair Jay Powell warned that high inflation poses a “severe threat” to the US’s job market recovery. The bank would raise rates more aggressively if needed, he said, and laid out plans for normalising monetary policy.

US inflation figures posted on Wednesday will have done nothing to alleviate the Fed’s concerns, either. The US consumer price index rose 7 per cent year-on-year in December – the largest rise since June 1982.

Following that data, Patrick Harker, president of the Philadelphia branch of the Fed, told the FT he would be “very open” to starting rate rises in March and would support more than three increases this year if needed.

Indeed, investors are already positioning themselves for the Fed to raise rates and end its bond-buying programme. The markets were jolted early this year by a surge in real yields — the return bond investors can expect once inflation is accounted for.

But it is not all turmoil. Despite high inflation, supply chain woes, wages pressure and Omicron, US companies are expected to report strong profits for the last quarter as earnings season kicks off this week. 

There is similar optimism among UK companies too. Staff shortages – which businesses report to be at about double their usual rate due to Omicron – are concerning. Nevertheless, three surveys published on Monday showed that business leaders are planning to expand operations and increase investment in 2022.

Likewise, economists predict that Omicron will only modestly affect the UK economy. A decline in GDP in December and January is widely anticipated, following what is predicted to be strong growth for November when official figures are published on Friday.

There’s always Brexit to consider, however. It is a year since the UK left the single market, and rather than huge amounts of financial sector business moving to the EU overnight, “the City is enduring a slow puncture that will take years or decades to play out.

The post-Brexit regulation regime for finance is still being hammered out too, including a proposal for a new statutory panel to scrutinise regulators’ cost-benefit assessments of their work.

Business columnist Helen Thomas issues a note of caution about the idea. “The danger is that analysis that is something of an art becomes held up as a pseudoscience, or a way of getting at The Right Answer,” she writes.

Into corporate governance and the Financial Reporting Council told a tribunal that a KPMG partner and colleagues were motivated to forge documents and mislead regulators because they wanted to avoid criticism of their audit of Carillion.

The firm tried to distance itself from the actions of its former staff and argued that there was “no systemic problem”. Meanwhile, the tribunal also heard that the most junior member of the KPMG audit team was unaware he was doing anything wrong.

And finally, directors looking at strategy and risk might be interested in the collapse of Bulb Energy. New documents show that it failed because it had a risky hedging strategy and ran out of credit lines when prices surged.

In his annual letter to investors on Tuesday, influential fund manager Terry Smith claimed that Unilever had “lost the plot” by fixating on sustainability.

This was the most public sign yet of investor discontent with the global consumer goods group. Indeed, its share price is only slightly higher than when it fought off a bid from Kraft Heinz almost five years ago.

If this has got you thinking about working with investors, there are useful insights from the Harvard Business Review.

For a closer look at ESG and sustainability, there’s an interesting blog about the path to a global disclosure framework from the Harvard Law School Forum on Corporate Governance.

PwC also recently published a guide to ESG oversight for corporate directors.

Don’t forget, there are plenty more resources on our online hub FT.com/Board.

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