5 Top Corporate Governance Initiatives for 2019
What is corporate governance?
Corporate governance is a system of different rules, practices and processes which is directed and controlled by a firm. Corporate governance usually involves balancing the interest of different stakeholders such as management, customers, suppliers, government, community and shareholders.
Corporate governance provides the framework for a company’s objectives; it looks over every aspect of management from the action plans and internal controls.
The elements of corporate governance are to conduct the business with all integrity and fairness which includes being transparent with all the transactions and making all necessary disclosures and decisions. Corporate governance is important because there is a level of confidence that is associated with the company. The presence of an active group of independent directors on board creates a sense of security and confidence in the market.
Most foreign institutional investors are depending on the corporate governance when deciding on which companies to invest in. It has also known to have a positive influence on share prices of the company. Corporate governance courses will help explain more about the ins and outs of corporate governance.
Here are 5 top corporate governance initiatives for 2019:
- Diversity is an important initiative as this will be the year for gender diversity which is looking towards 30 percent of company board members being female. Starting in 2020 institutional shareholder services will vote no on re-election of nominating and governance chairman if their company doesn’t have at least one woman on the board.
- Retirement ages are rising because people are living longer which means that they are working for many more years. Most companies should review their retirement ages before an issue is raised. There can be an exception made for certain C level executives. The initiative will review the ages and make adjustments which include looking at the retirement ages for all the board members.
- Environmental issues are a hot topic for many different companies, this is a macro trend with 22 trillion of investment capital. There has been a big initiative that sees companies trying to keep their plastic usage to a minimum and to put money into helping the environment. This corporate governance initiative will be popular for 2019 as many companies are already on board.
- Hedge fund activity means shareholders proposals continue to decline because their tactics to stir public debate on their portfolio companies business strategy. Companies with large hedge fund ownership should proactively seek to engage these shareholders.
- Digital directors with tech knowledge and experience are a must because this is leading the way to younger board members. There more than 50 young directors than in 2018. Technology has been increasing in recent years which mean that it is important to get on board.
Need help understanding the importance of good corporate governance? Read more about the benefits of corporate governance and browse through the courses at London TFE.