Welcome to your weekly corporate governance briefing. There is plenty to get stuck into – from ESG and pay, to culture and strategy. Before we get started, there are a couple of exclusive member events to add to your diary: June 6, Virtual | 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. June 14, Virtual | Silo-busters. This peer-to-peer workshop is a chance to learn from each other and share practical ideas on how to build teams that contribute to strong organisational cultures. Sign up here.
And don’t forget to get in touch about our AOB section. Overheard any nuggets of wisdom or wit in the boardroom that you might like to share? Email me your offering and I will consider it for inclusion (anonymised where appropriate, of course). 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. Regulation risks depersonalising ESG
EU commissioner Mairead McGuinness at the Moral Money Summit in London Corporate sustainability is, at root, about people, planet and profit. But the debate about how to achieve a balance is increasingly clogged with frameworks, regulations and abbreviations – from SASB to TNFD, and even ESG itself. Some regulatory superstructure is needed. It lets investors and boards benchmark progress against others, for instance. But it can also slow things down. Last week, I chaired the FT Moral Money Summit in London, where EU commissioner Mairead McGuinness called for “buy-in, not resistance” from companies. She pointed out that many “would like a global standard” in sustainable finance regulation. “I believe in fairy tales, too,” she said, but “if we waited for global standards, it would be armageddon”. Another risk is that a fixation on regulatory frameworks depersonalises the ESG challenges facing companies, and makes it potentially easier for the people in charge to ignore them. The UK’s largest private-sector pension plan, the Universities Superannuation Scheme, is putting people – notably chairs and directors – in the foreground. It has chosen to direct its voting power at responsible board members, rather than voting against annual reports. It will act where “a company hasn’t disclosed its climate transition plan, doesn’t meet our diversity expectations, or where executive pay doesn’t align with company performance”. Speaking at the summit, Simon Pilcher, chief executive of the scheme’s investment management arm, made the cute point that USS’s approach was in part motivated by research from its own beneficiaries: academics have found that taking a more personal approach is more effective in encouraging change. Finally, there was a direct challenge to any board member still smugly assuming that the climate emergency can be ignored or managed. Polish youth activist Dominika Lasota cut through the jungle of acronyms and jargon with a simple question for Moral Money summiteers: “Are you here because you’re concerned with the current crisis or because you want to keep up business as usual and find ways to avoid bad PR?” Chart of the weekFord has a tough road ahead to convince investors that it can transform its fortunes. The 10 per cent target for adjusted earnings before interest and taxation by 2026 was announced before a recent investor day. But how to reach that destination – including moves to cut costs and turn a profit in the electric car division and digital services – is now under scrutiny. Ford lags behind GM in profitability raceAdjusted ebit margins (%)
| Centerview: the Wall St power brokers confronting a rare rupture | People and work: An example of how culture can crumble. The boutique bank faces a bitter legal battle and longer-term challenges including succession and growth | | | PwC suspends 9 partners over Australian tax leak scandal | Audit: The move to suspend partners — including members of its executive and governance board — is the latest escalation of a scandal that erupted in February and I reckon this won’t be the last you’ll hear of it | | | Philip Morris on path to becoming an ESG stock, says chief executive | Strategy: Jacek Olczak argued that the shift from cigarettes to vapour-based nicotine alternatives put the group’s new product line ‘on the podium’ when it came to ESG impact | | | Temasek cuts pay of employees behind failed $275mn bet on FTX | Remuneration: While the Singaporean state investor said there was ‘no misconduct’, it was ‘disappointed’ with the investment and the reputational damage | | | | Best from elsewhereExpanding roles, risks and opportunities for boards in another disruptive year | BDO The spring 2023 pulse survey looks at the challenges facing boards and how they are being addressed. Economic volatility, geopolitical disruption and talent shortages are at the top of boards’ risk assessment, while ESG matters are at the bottom. The challenge of accessing high-quality carbon offsets as part of the net-zero transition | PwC This research suggests that the price of carbon offsets could rise “significantly” in future. Yet few FTSE 350 companies reference this risk in their corporate reports, making it hard for investors and stakeholders to consider how it might affect net-zero transition plans. The imperfect CEO | Harvard Law School Forum on Corporate Governance While it’s no surprise to see an executive search firm discussing a case study where they supported a successful succession, this piece explores some interesting points about how the expectations around chief executives have increased over recent years – and how to identify potential.
From FT Specialist’s AgendaCyber insurance rate hikes slow – but exclusions expand AOBThis is a fascinating interview with the head of Wellcome Leap. Dugan explores a range of topics, including the decision to fund a programme investigating whether mRNA could be used to make vaccines, and the lessons she learned from being diagnosed with ovarian cancer aged just nine. Have words of wisdom to share? Email me. |