Post COVID-19: Board voting patterns point to sustainability
A look at changes in board of directors and institutional investor behaviour in the post COVID-19 world
In this unprecedented era caused by the Coronavirus (COVID-19) outbreak, many familiar features of the corporate governance landscape have changed significantly. The areas about which shareholders engage with portfolio companies are evolving, given the increasing number of challenges companies are facing now. Across the globe and in the results of voting outcomes across multiple companies, we have witnessed a growing convergence of the concepts of sustainability together with long-term shareholder value. In this article, we discuss the key areas that boards of directors and management need to consider in their engagement with investors.
Some institutional investor research supported by leading scholars, has found that “investors increasingly want to align with companies that truly understand the importance of proper ESG management when it comes to business resiliency and operations.” Indeed, across the globe and in the results of voting outcomes across multiple companies, we have witnessed a growing convergence of the concepts of sustainability (such as climate change, race and gender diversity) together with long-term shareholder value. Therefore, board of directors and institutional investors should consider placing an increased focus on these ESG-related trends and voting patterns in the coming months and beyond.
It is worth noting that the global COVD-19 pandemic has turned the 2020 governance agenda upside down, and forced all corporate actors to focus on topics requiring immediate attention. More than ever, a detailed and forward-looking plan for the next proxy season will be required. We expect to see stronger shareholder/company dialogue and updated investment stewardship strategies, which should empower boards of directors and institutional investors to properly address crisis recovery and sustainability issues in the upcoming years.