Welcome back to your updated board briefing. I hope you are enjoying the changes – I would love to know what you think, so please do hit reply to share your feedback.

I am always on the lookout for any nuggets of wisdom or wit that you’ve come across in boardrooms for our new section, AOB. Overheard an insight that you’d like to share? Email me your offering and I will consider it for inclusion – anonymised where appropriate, of course.

There are two exclusive member events to add to your diary:

• May 23, London | Roundtable: Hybrid working as the ‘new normal’ Discuss the challenges and opportunities with Board Network peers. This event is for VIP members only. If you’d like to attend, please contact [email protected]. 

• June 6, Virtual | The rise of cyber attacks: how prepared is your business? Join experts including Ciaran Martin, founding chief executive of the National Cyber Security Centre and professor at the University of Oxford. RSVP here.

As always, the latest stories and resources are on ft.com/board-network-members. If you have any membership queries, email [email protected]. And feel free to forward this newsletter to other directors. They can join FT Board Network via ft.com/board-network. Thanks for reading.

Ethics and culture regulators

The UK’s premier business lobby group, the CBI, recently appointed an ethics consultancy to help it navigate out of a morass of scandals. Few companies feel the need to keep an ethicist in the boardroom, but increasingly they should be able to refer to a workable ethical code. 

As Ian Peters, who heads the Institute of Business Ethics, told the FT this week, setting and maintaining an acceptable culture is much more likely when “firms take the trouble to get the right ethical framework in place and to keep checking that it’s working”. The IBE’s latest survey shows almost half of FTSE350 companies do not have a publicly available code of ethics. Worse, the institute judged only 57 per cent of the codes were “good”.

It has been a few years since boards could shirk their responsibility to oversee culture. The UK enshrined the topic in its corporate governance code nearly a decade ago, laying the emphasis on the board to “assess and monitor” culture. The then chair of the Securities and Exchange Commission echoed UK efforts in 2018 in a speech that pointed out culture was both a combination of individual actions and “tone at the top”. 

Antony Jenkins, who set about reforming Barclays’ culture in 2012 following the Libor rate-fixing scandal and now heads fintech company 10x Banking, told me recently he would follow a five-point plan to stop the ethical and cultural rot. First, define the culture you’re trying to create; then retool the organisation - and its incentive system - to achieve the outcomes you want; ensure your values guide your decision-making; test the culture change, by using employee, investor, and customer surveys; act in a way consistent with your values. “Culture is susceptible to diagnosis and it’s also susceptible to change,” he said. “It’s not easy but it’s possible.”

Directors are, in this sense, among the best-placed regulators of ethics and culture. They are close enough to spot the red flags, but separate enough from management to be able to act on warnings. Jenkins makes another important point, echoed by the IBE’s Peters: culture cannot be fixed and then left alone. “It’s a constant battle.” Arm up, directors.

Chart of the week

There is growing alarm in Europe about the fragility of its supply chains and its reliance on Taiwan and South Korea for semiconductors.

But does Germany’s huge investment in boosting chip production make economic sense? Some think not: “It would probably be more efficient to just buy cheap subsidised chips from the US,” said Reint Gropp, head of the Leibniz Institute for Economic Research, Halle (IWH).

‌

‌

My top FT picks

How a publicity-shy chair is revamping Deutsche Bank Leadership: Alexander Wynaendts is proving his sceptics wrong, making some tough decisions at the bank. But he’s got his work cut out to rebuild trust, improve controls and rein in costs Oaktree’s Howard Marks warns of crunch time for private credit Risk: The billionaire said higher interest rates and slower growth are about to test the market – and reveal whether asset managers have maintained an “adequate margin of safety” Record buyback spree attracts shareholder complaints Stewardship: Some investors are concerned that this growing practice is bumping up executive bonuses but only giving shareholders limited benefits Della Valle vows to draw a line under Vodafone’s past Strategy: New chief executive Margherita Della Valle is focused on speed and decisiveness in her mission to revitalise the group

‌

Best from elsewhere

1. Strategies for successful corporate separations | Goldman Sachs and EY Thinking about spinning off or divesting? This report includes findings from some quantitative analysis of separations, alongside helpful insights on topics such as communicating with stakeholders.

2. Does board size matter? | European Corporate Governance Institute This paper analyses German companies to consider the effects of board size. And they find “robust evidence that forcing firms to have large supervisory boards is detrimental to their performance and value.”

3. How big things get done with Bent Flyvbjerg | BCG Henderson Institute Just 0.5 per cent of major projects deliver their desired benefits on time and on budget. This podcast explores why and includes some tips for executives who want to avoid being another statistic. I interviewed Flyvbjerg myself earlier this year and you can watch our discussion here.

From FT Specialist’s Agenda

Reputation and regulation: the risk of record profits

AOB

In an interview with the FT, Airbnb’s chief executive talks about everything from going public, to bringing the business back to its roots. Have words of wisdom to share? Email me.