Directors’ Series

Powerful forces are driving investors to demand better foresight into companies’ future prospects and long term viability. Directors face a challenge as they chart a course that responds to both the forces of the market and their compliance responsibilities. While for some companies and their boards this will be a bumpy journey, the train has clearly left the station.

This was the topic of discussion at our November 15 Directors’ Series session. Hear first-hand from our esteemed panel as they explore this theme and share perspectives of the investor, management, regulator, audit committee, and broader board. We invite you to view the following clips that highlight the panel’s key messages. Kicking things off - the session’s moderator, Richard Olfert, Managing Partner, Regulatory, Quality and Risk, Deloitte Canada.

Also available for replay is the full broadcast. In the meantime, here are key insights shared from the panelists:

• A company’s value creation model and ability to tell its story is at the core of a prospective investor’s decision to commit its capital.
• As companies’ universe of performance metrics expands, two challenges arise. The first is to bring insight. The second is to ensure data integrity, especially as many of the metrics are “beyond GAAP”.
• Investors’ focus on longer-term viability, lines up with stakeholder concerns about social and environmental performance. Boards need to consider ESG factors holistically as areas of both risk and opportunity.
• Shareholder Engagement - Major global investors have turned up the heat and are communicating heightened expectations for direct interaction with boards. An initial step for boards might be to engage with investors through the board Chair.

What did we hear from our participants? In local discussions following our panel discussion, participants shared their perspectives. Notwithstanding practical concerns about their ever-expanding responsibilities, there was no pushback on the question of need - the need for more clarity about sense of purpose, the need for a better way to tell the story and the need for new metrics to track performance.

Below are a few of the themes that emerged during our in-room discussions:

• A clear value creation model is key. Board discussions are in progress, but it will take time for the pieces to fall into place. 
• Boards disregard ESG factors at their peril. 
• Views on the role played by regulators and standard setters run the gamut from “stuck in the past” to “are bringing discipline to the market”.
• Workloads and Skills - Audit committees have become overburdened. Roles, responsibilities agendas all need review. Committees need outside experts to assist with assurance on non-financial performance metrics. They should review their committee make-up and consider non-financial as well as financial skill requirements. 

The insights shared by panelists and participants across the country on The pivot to future performance – Challenges for the Board and Audit Committee is just scratching the surface. We encourage you to drive the conversation forward! If you would like to offer a comment or require further information, please reach out to us at auditandassurance@deloitte.ca.