An opportunity for impact
Recommendations for regulating modern slavery in supply chains in Aotearoa New Zealand.
The importance of culture and conduct considerations for chairs and boards has been brought into sharp relief in New Zealand with the backlash to Simon Henry’s comments about Nadia Lim on the My Food Bag IPO prospectus. In the UK, Aviva Chair George Culmer defended the board and CEO from inappropriate comments made by shareholders during their AGM.
The Four Pillars of Best Practice Governance emphasises the unique role chairs have in leading their boards and acting as a mentor/advisor for the chief executive. This includes leading an inclusive culture and promoting diversity on the board and executive management.
Overall, this helps the board to collectively set the “tone from the top” for the organisations they govern and lead.
An effective tone from the top impacts on many of the top five issues for directors in 2022 including:
Paying attention to these issues is critical for boards and management. Highlighting best practice and speaking out against bad behaviours, whether staff, clients, suppliers, investors, the executive or even the board itself is critical as is the board's focus on reputation and brand.
The IoD/ASB 2021 Director Sentiment Survey notes that:
“the proportion of [survey] respondents who think the CEO should speak out on social issues has almost doubled (50%, up from 28% in 2020). Meanwhile a slightly higher proportion (54%) thought the board should …… we [also] found a strong majority of boards (85%) regularly discuss the organisation’s brand and reputation.”
As we've seen in recent weeks, societal expectations of boards and executive leaders go beyond legal compliance to expecting high standards of ethical behaviour, care and diligence.
Chairs should embody, inspire and promote organisational values and ethical behaviours and hold themselves and others on the board and executive to account. Failure to do so may have a significant negative impact on the brand, reputation, productivity and ultimately the bottom line of their organisations.