Welcome to your corporate governance briefing. Ahead of the summer break, the team has been putting together next year’s event agenda. While there are no sign up links yet, it might be worth noting the following in your diary: October 18 | Generative AI Join the FT’s artificial intelligence editor Madhumita Murgia and guest to discuss how machine learning will affect your business.
November 29 | Forecasting the world in 2024 FT journalists including foreign editor Alec Russell, economics editor Chris Giles, US financial editor Brooke Masters, and world news editor Alex Barker will share their predictions.
I would love to hear from you for our AOB section where we highlight any interesting quotes, useful tidbits – or even a little corporate governance comedy. Email me your offering and I will consider it for inclusion (anonymising where required). As always, the latest stories and resources are on ft.com/board-network-members. If you have any membership queries, email [email protected]. Feel free to forward this newsletter to other directors. They can join FT Board Network via ft.com/board-network. Thanks for reading. It’s not just where to allocate resources – it’s when
Stratasys CEO Yoav Zeif in a mobile showroom for the 3D printing company © Glen Stubbe/Minneapolis Star Tribune/TNS/ABACA via Reuters Connect Would you invest in a revolution? More to the point, when would you invest? These questions sprang to mind when I read this week about intrigue in the world of 3D printing, hailed as a break-through technology some 10 years ago. Four leading companies specialising in what is now more usually called additive manufacturing - Stratasys, 3D Systems, Nano Dimension and Desktop Metal - are embroiled in dealmaking and litigation after their shares collapsed from their 2021 peak and cash dried up. “Everyone is aligned on one thing: that consolidation should happen,” one investment banker told the FT. The companies’ scramble for salvation has prompted considerable Schadenfreude among technology sceptics. The sector was hyped in the early 2010s, with predictions that it would bring an end to “mass production” as 3D printers popped up in homes and offices. New companies sprang up to feed the frenzy and existing manufacturers rushed to invest in the technology. But directors and investors need to learn when to allocate resources as well as where to allocate them. Some just went too soon. Additive manufacturing faces obstacles from lack of materials to unreliability at scale, but it is still developing. Recent news stories cover 3D-printing of satellites, turbine parts, data centres, homes and schools. My colleague Rana Foroohar produced a film in April about the promise of 3D printing to revive US manufacturing. When I interviewed the CEO of venerable white goods manufacturer GE Appliances in 2021, he talked about using the technology to produce smaller runs of products, which were previously unviable - the sort of “mass customisation” that was predicted 10 years ago. The first internet bubble burst in part because investment in bright online ideas had run ahead of the reality of slow dial-up internet connections. When broadband became more widespread, many of those ideas - ridiculed in 2000 - became feasible. Strategy-setting is never easy, but board directors should remember that when everyone else is declaring or dismissing a revolution, patience can be a virtue. Chart of the weekReaganomics rejected large-scale US government intervention in the economy. Four decades later, Bidenomics is embracing it wholeheartedly. Subsidies are being heaped on domestic producers in strategic sectors with the aim of creating thousands of jobs. But there’s a foreign policy element too – the Biden administration wants to reverse the movement of manufacturing jobs to China, and challenge Beijing’s competitiveness in clean energy and tech. “This vision is a fundamental break from the economic theory that has failed America’s middle class for decades now,” Biden said in a speech last month. China has been ahead of the world for years in clean energy manufacturing investmentShare of manufacturing investment by country (%)
| Jeremy Hunt’s ‘Mansion House reforms’ seek to channel pension savings into unlisted firms | Economic policy: The package includes a “compact” among nine UK pension providers to commit 5 per cent of their default funds for defined contribution pension savers to unlisted equities by 2030 | | | KKR buyout shows modern dilemmas boards face | Risk: The board at Circor had its work cut out here. KKR won the auction for the US industrials company, despite having a lower bid, by claiming financing and competition risks from its rival | | | Corporate Japan back in the hunt for US deals | M&A: “They [Japanese companies] are in a shrinking domestic market, with a shrinking population. They have to expand overseas. There is no choice,” said one lawyer. | | | Exits of diversity executives shake faith in US companies’ commitments | DE&I: Evidence suggests business is curtailing investment in inclusion three years after George Floyd’s murder put pressure on companies to do more to address racial inequities | | | | Best from elsewhereAn internal governance framework for CEO comments on public policy | Directors & Boards To speak out on issues or not, that is the conundrum. This article helpfully explores many of the knots – outlining general principles about directors’ roles and sharing a framework to help decide whether a company should make public comments. The role of the board in the sustainability era | BCG, Heidrick & Struggles, and the Insead Corporate Governance Centre Some 68 per cent of respondents said sustainability considerations have no – or a slight – effect on financial performance today. Directors report that the main drivers of sustainability are doing “the right thing” (52 per cent) and “increasing legislative and regulatory requirements” (51 per cent). In the face of volatility, CFOs — and their organisations — adapt | McKinsey Over half (55 per cent) of respondents to this CFO pulse survey are optimistic about the expected rate of growth in their industry over the next year, and 57 per cent expect higher levels of investment over the next 12 months. The survey collated responses from 137 financial leaders.
From FT Specialist’s AgendaA sustainable accounting language: How the ISSB standards will affect boards Experts warn that the measures are likely to require more comprehensive sustainability disclosures than companies currently make, and “significant investment in technology, people and processes”. Any other businessThe outgoing chief executive of UK-based video games developer and publisher Team17 discusses her rise to the top of the gaming industry – a sector known for its sexist attitudes. Have words of wisdom to share? Email me. |