From Boardspan this Week:
Boards Can Surmount The Cybersecurity ‘Intimidation Factor’: 10 Questions Directors Should Discuss With C-Suites
How do you talk about cybersecurity with the C-Suite? Whether you have on-board expertise or not, here are the questions you should address.
“Many corporate boards have made significant progress about understanding the importance of cybersecurity to the competitive health, operational resilience, investment appeal, and customer loyalty and attractiveness of the companies they oversee. They’ve certainly gotten the message that enhancing cybersecurity is not just an IT issue. It lies at the core of state-of-the-art corporate governance practices. And, within the portion of board meetings devoted to risk assessment, cybersecurity is almost always one of the top items on the agenda—in no small way because increasingly the litigation risks emanating from cyber vulnerability are growing substantially.” FORBES via BOARDSPAN
Across the Board
SEC Considers Softening Climate Disclosures
While the SEC considers strengthening disclosure regulation on cybersecurity, it looks at softening rules around climate disclosure.
"The Wall Street regulator is looking again at the financial reporting aspect of the climate-disclosure plan it issued last year, following pushback from investors, companies and lawmakers, the people said. The final version of the SEC rules, expected this year, will likely still mandate some climate disclosures in financial statements.” THE WALL STREET JOURNAL
Shell’s Board Sued Over Climate Strategy
Speaking of climate, Shell faces a first-of-its-kind lawsuit that may have a big impact on other companies’ environmental measures.
“Shell’s directors are being personally sued for allegedly failing to adequately manage the risks associated with the climate emergency in a first-of-its-kind lawsuit that could have widespread implications for how other companies plan to cut emissions. Environmental law firm ClientEarth, in its capacity as a shareholder, filed the lawsuit against the British oil major’s board… It alleges 11 members of Shell’s board are mismanaging climate risk, breaching company law by failing to implement an energy transition strategy that aligns with the landmark 2015 Paris Agreement.” CNBC
Shareholder vs. Stakeholder Primacy: The Middle Way
It’s the age-old battle: Shareholder value vs. good corporate citizenship. But the former Delaware Supreme Court Chief Justice reinforces the idea that it’s not a tradeoff, there is a fertile middle ground.
“Strine argues that directors must focus solely on shareholder returns but in doing so should also consider how the corporation’s activities impact other important constituencies who are integral to the success of the business, such as shareholders, employees, consumers, creditors and communities.” DIRECTORS & BOARDS
New Software Gives Shareholders of Large Funds a Louder Voice
A startup in Great Britain can give shareholders who own a stake in public companies through a large fund a way to be heard before a proxy vote.
“In theory, the shareholders of Exxon Mobil control it and can vote to replace the oil wells with solar panels if that’s what they want. Two problems here. One is that you probably own your shares indirectly. If you have $100,000 in an S&P 500 index fund, you have 12 shares of Exxon, but you don’t get the proxy. The fund operator does. Tumelo steps in the middle, collecting fees from brokers and funds that want to offer a voting feature as a selling point." FORBES
How Subsidiary Board Service Diversifies Director Candidate Pools
Subsidiary board service can be a stepping stone for diverse candidates to build a resume for service on larger, more influential boards.
“The business case for board diversity is not new and may no longer be forward-thinking. While organizations and other parties have introduced initiatives to encourage boardroom diversity, developing the next generation of board members is a persistent challenge for many business leaders…By providing this opportunity to their executives through a formalized policy, organizations can fill subsidiary boards with those that are interested in board service, and the executives can gain valuable experience of serving on a board.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
