Latest shocking scoop: investors and companies disagree

ISS released the results of its 2019 Global Policy Survey. Interestingly, the data points towards major differences of opinion between the people running companies and the people that own them.

The participants in the survey were divided into two categories. Investors represented asset managers, asset owners, advisors to institutional investors and any other type of investor. Non-Investors represented employees, board members or advisors to public corporations and any other type of non-investor.

Most of this survey had questions directed towards specific countries. Unfortunately, Australia was not a specified country. Questions posed globally include questions on director overboarding, board gender diversity and risk oversight on climate change.

Recently there has been a crackdown on director overboarding, meaning directors serving on many boards. In response to a question on this problem, investors said four was an appropriate limit. Non-investors said a general limit should not apply.

A further division exists regarding CEO service on other boards. Investors said CEOs serving on two boards, including their own, was appropriate whereas non-investors stated yet again that there should not be a general limit.

A majority of both investors and non-investors agree that gender diversity is an essential attribute of effective board governance. Guerdon Associates has investigated the impact of women and board performance (see HERE) .

The second most selected response differed between investors and non-investors. Investors said it should be examined on a market by market basis. Non-Investors said it should be addressed at a company level.

Investors also showed their support for assessing and disclosing climate-related risks including taking action where appropriate. Non-investor preference is that each company level of disclosure is appropriate given its industry and other company-specific factors. The final outcome, supported by a minority of both investors and non-investors was that climate change is too uncertain and it should not be a priority. The discourse between the majority of investors and non-investors displays a situation where the individuals assigned with running companies are not on the same page as the groups and individuals investing in them.

Overall the ISS survey again emphasised that investors have differing opinions from those running companies. These conflicts may leave both sides of the relationship dissatisfied. The full survey and its results can be found HERE .

© Guerdon Associates 2024
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