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Governance professionals must look to European concerns

14 May 2018 by Peter Swabey

Governance professionals must look to European concerns - Read more

A look at governance developments from outside the UK

Regional conference season is under way, and I began writing this column at the airport on my way home from back-to-back events in Guernsey and Jersey, where I spoke to more than 250 delegates about our research on the stakeholder voice in board decision making.

This has been a popular piece of guidance and seems to have struck a real chord with those who have read it.

Two of my personal highlights from the conferences were: in Guernsey, where Stuart Lawson of Northern Trust gave perhaps the most user-friendly (and, therefore, informative) explanation of blockchain and its implications for our markets that I have heard; and in Jersey, where Rob Shapland of First Base Technologies scared and comforted us all with his stories and advice on responding to a cyber-security breach.

I will be talking about the stakeholder voice again at our Isle of Man conference in Douglas on 9 May, before attending our Ireland conference in Dublin on 17 May and our Scottish conference on 23 May.

It has been great to meet so many enthusiastic members but there is more to come, with our annual conference in London on 10–11 July, and I hope to see more of you there. I was discussing the programme with the team last week and it looks set to be another blockbuster event.

I also recently spent a day in Sofia, Bulgaria at the European Presidency conference on corporate governance. Although there is plenty going on in the UK corporate governance world, with new legislation and a revised UK Corporate Governance Code expected during the summer, we must not lose sight of developments on a pan-European basis.

“There is a clear appetite in Europe for increasing the use of technology in the corporate governance space”

The European Commission is continuing its work on the Shareholder Rights Directive – we are now into the development of implementing legislation and, given that the UK government has indicated that this directive will be implemented in the UK, it is important that we keep changes here under review. Indications are that there will also be a fifth anti-money laundering directive on its way.

There is a clear appetite in Europe for increasing the use of technology in the corporate governance space, particularly given the rise of the intangible economy, with taxi companies that do not own any taxis and hotel companies that do not own any hotels.

There is also an appetite for further reporting, mostly non-financial, but with a focus on value-creation – given that, as we were told, of the top 100 ‘economies’ in the world today 69 of them are companies rather than countries.

There is also a concern about the implications of the new requirements around executive pay – many of them ones with which we are quite familiar – and it was interesting to hear many of the prophets of woe repeating the arguments that we heard back when remuneration reporting was first being discussed.

More generally, there is a concern in some member states that companies, particularly SMEs, are beginning to delist to avoid the regulatory burden. This is, apparently, a particular problem in France.

Then there is the imminent arrival of the General Data Protection Regulation, which seems to be leaving organisations in Europe as flummoxed as some in the UK.

While I have been gallivanting around, the team have been hard at work, notably in updating guidance notes, with the first tranche of charity guidance recently released – updated in light of the Charities (Protection and Social Investment) Act 2016 and the Charity Governance Code, and a few other little tweaks here and there.

There is also a new guidance note for colleges, produced in association with the Sixth Form Colleges Association.

We have also started work on our response to the BEIS consultation on corporate governance and insolvency and on 11 May will launch a new report into culture in sports bodies, complementing previous reports into culture within the corporate and charity sectors, at our Sports Governance workshop. You can read more about that in Craig Beeston’s article here.

Finally, I am delighted that we will be welcoming ProShare to ICSA. I have worked with them for many years and have always believed that employee share ownership is an important support for good corporate governance.

With the increasing focus on the stakeholder voice in the boardroom, the opportunities for employee share ownership can only increase, and I am looking forward to developing this work further with the ProShare team.

You can read Gabbi Stopp’s excellent article on the relationship between shareholders and stakeholders on our website. I am sure that this will be the first of many ProShare contributions.

As always, I would be happy to receive any feedback or suggestions as to what the policy team can do, or comments on the BEIS consultation, at policy@icsa.org.uk

Peter Swabey FCIS is policy and research director at ICSA: The Governance Institute

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