What does good governance look like?
Firstly, good governance starts with a company’s board of directors. An effective board should be independent and reflect both diversity of skill, experience, and opinion and diversity of personal characteristics – such as gender, race, and ethnicity.
Secondly, boards should have oversight of a company’s strategy and effective governance of material risks, including environmental and social risks.
Third, executive remuneration should be linked to long-term performance and should incentivise a company’s outperformance of its peers.
Finally, we look for shareholder rights that empower shareholders to use their voice and their vote to ensure the accountability of a company’s board.
Read the full Q&A in ESG Clarity’s November 2021 digital magazine.
