Researchers Sarah Kaplan and Peter Dey laid out 13 guidelines for improving board governance in a report published Monday. They include aligning compensation with corporate purpose; creating targets to improve board membership of women, visible minorities and other underrepresented groups; placing more emphasis on the risks and opportunities related to climate change; and establishing processes around a company’s political stances on issues that affect stakeholders. (The Logic)
Talking point: The report comes 27 years after Dey chaired a committee that saw the Toronto Stock Exchange update board guidelines to include basic tenets like majority of directors being independent from management and keeping the CEO and chair positions separate. While the reforms helped increase shareholder activism, Kaplan and Dey said they have become insufficient given today’s social and environmental challenges. The new guidelines reflect changing attitudes among stakeholders—including institutional investors and consumers—that corporate responsibility extends beyond the shareholder to also include workers, the environment and others that may be affected by a firm’s operations.