Across the Board
Where Does Cyber Security Fit in Your Board’s ESG Strategy?
"At its core, ESG stands for the principle that one should identify and consider environmental, social, and governance factors when making business and investment decisions. But this basic concept has morphed into something seriously flawed—elusive to those trying to objectively define it for constructive purposes and at the same time too easily contorted by those with less-than-constructive commercial and political interests…Corporations manage cyber security along with physical security and other types of business interruption risks … Now cyber security is also being characterized as an ESG issue. If cyber security is ESG, is it E, S, G, or some combination thereof?… If forced to assign one letter of ESG to cyber security, the one most proximate is G on the notion that a company’s board of directors has a duty oversee cyber security (and ERM more generally) or under the concept of ‘data governance.’” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Cyber Governance Resilience in the Board Room
“Today's headlines make clear that privacy and cybersecurity have moved beyond IT and legal compliance issues and are now environmental, social, and governance (ESG) benchmarks vitally affecting market caps and shareholder values... The investor community is watching to see what boards do. Proxy advisors, such as Institutional Shareholder Services (ISS), have been quietly rating companies on their cyber and privacy practices via the governance prong of ESG scoring. Top global investors recently ranked cybersecurity as their second highest ESG concern … According to the SEC, ‘Board oversight should not be a passive activity,’ and called for boards to receive and read written reports.” MONDAQ
Board Crisis Response When the CEO is Absent
"CEOs are often called on to provide leadership in a crisis. But what does an organization do when, for whatever reason, there’s no one in the corner office to respond to a disaster, scandal, or other business emergencies? Companies could find themselves in this vexing situation if they don’t have a succession plan for when their top executive dies, is fired or resigns, and board members cannot work together to address the crisis. While rare, delays happen. These worst-case scenarios that become a reality create a crisis for organizations ... If there is no CEO or he or she cannot be involved in the decision-making process, directors should be prepared to lean in to support management, based upon the skills, experiences and capabilities of the individual board members and the area(s) of need." FORBES
Directors Resign Amid DOJ Targeting Competing Company Seats
"Board members at Udemy Inc., SolarWinds Corp. and three other public companies resigned in recent weeks because they simultaneously served as directors of competing companies, the Justice Department said. The moves came after DOJ officials signaled earlier this year that they would enforce a law that bars people from serving on the boards of rival companies, an arrangement that could lead to illicit collusion. The Justice Department is reviewing whether other directors and companies have violated the law ... Three directors of SolarWinds resigned in response to the DOJ’s concerns about board overlaps, the Justice Department said. The three former board members all represented the interests of private-equity firm Thoma Bravo LP, the DOJ said. Investment funds managed by Thoma Bravo own 31% of SolarWinds’s shares outstanding ... The section of federal law that bars simultaneous service on the boards of competing companies is known as an 'incipiency statute,' which allows enforcers to challenge deals and practices that could lead to competitive harm." THE WALL STREET JOURNAL
Opinion: Boards Navigating a Complex and Volatile World
“Since the end of the Cold War, global corporations seemed to be navigating a geopolitical risk-free world. The process of economic globalization spread out of the US and Western Europe to encompass the whole world, promoting the integration of markets through trade and finance … Fast-forward 30 years, and the geopolitical landscape has been completely transformed … Today, great-power competition and geostrategic rivalries are redrawing the global map and, in the process, disrupting investments, affecting supply chains and cross-border trade flows, changing the rules of the game in multilateral institutions ... The practice of corporate geopolitics needs to be at the highest strategic level of corporate decision-making. A member of the board, ideally a former senior government official versed in foreign policy, should be appointed ‘chief geopolitical strategist’ (CGS) … The main task of the CGS is to build geopolitical resilience for the corporation. Geopolitical analysis and scenarios, based on the realistic assessments of the geopolitical landscape, should be actionable and tailor-made for the needs of the corporation and its overall strategy.” WORLD ECONOMIC FORUM
From the Boardspan Library
How Lead Directors Can Facilitate Board Engagement on Strategy
"At the end of the day, it’s management’s strategy. But the long-held view that the board’s role is limited to reviewing, understanding, and signing off on the strategy is giving way to deeper board engagement. Increasingly complex business conditions demand it, investors and stakeholders expect it, and lead directors are uniquely positioned to find the right level of engagement and facilitate quality discussions … the extent of the board’s engagement in strategy will vary by company as well as the lead director’s mandate and leadership style-—from having a light touch to being more active. It’s important to work with the CEO and board to find the right depth and dynamics.” KPMG via BOARDSPAN
