Key Corporate Governance Trends in 2023

Aug 25, 2024

Trends in Corporate Governance for 2023

Welcome to the overview of the eight biggest trends in corporate governance for 2023. Here’s what to look out for:

1. Board Quality

  • Increased scrutiny on board performance from stakeholders.
  • Global awareness, not just limited to the US.
  • Key focus areas:
    • India: More non-executive directors.
    • Brazil: Emphasis on gender diversity.
    • Europe: Need for a mix of financial and sustainability experts.

2. CEO Performance

  • Post-COVID recovery and global tensions heighten focus on CEO effectiveness.
  • Boards expected to be more involved in:
    • Succession planning.
    • Executive compensation.

3. ESG (Environmental, Social, Governance)

  • Investors are demanding transparency in ESG practices.
  • Importance of accuracy in sustainable practices disclosure.

4. Relationship Between Board and Executive Leadership

  • Directors taking a more active role in corporate affairs.
  • Increased expectations for compliance and fiduciary duties.

5. Risk Management

  • Emphasis on calculated risks for competitive advantage.
  • Encouragement for companies to establish risk management committees.

6. AI and Technology Regulation

  • AI is becoming a crucial aspect of corporate governance.
  • Draft laws in many countries; full regulations expected this year.
  • Importance of regulations due to the close interaction between technology and human oversight.

7. Ethical Standards

  • Shifting ethical expectations for companies.
  • Increased penalties for lapses and lasting damage to reputation.

8. Corporate Culture

  • Emphasis on the 'S' in ESG; investment in positive work culture is essential.
  • Ignoring corporate culture can lead to significant negative impacts.

Conclusion

These are the critical trends to watch in corporate governance for 2023. Which trend interests you the most? Let me know in the comments, and don't forget to like and share!