From the diversity of the board to oversight of new ESG risks, directors are coming under increasing pressure to rethink governance and decision making processes. Are Caribbean organisations living up to stakeholder expectations? PwC in the Caribbean’s Corporate Governance Survey 2022: Picking up the pace gauged the views of 193 directors from private and public sector organisations across the region to find out.
Snapshot
Boards are connecting ESG to strategy but may not fully understand the risks
While 54% of directors say ESG is linked to board strategy, only 10% say the board understands their material ESG risks very well and only 7% strongly agree that ESG is regularly on the board agenda. Further, ESG-related activities are at a low level of maturity. 14% of directors indicated that ESG issues are a part of the board’s enterprise risk management discussions, 12% indicated that the board has a standing committee dedicated to ESG issues, 9% indicated that there are board reports on ESG-related measures, and 4% indicated that the board has a defined process for ESG oversight.
%
would replace two or more fellow directors
Directors want more board refreshment
49% of directors say that at least one fellow board member should be replaced and 24% would replace two or more fellow board members.
Directors say board diversity is still a challenge
98% of directors agree that board diversity results in unique perspectives and enhances board and company performance. Despite this, 34% of directors reported their boards had taken no action on board diversity over the past two years and 39% of directors indicated that when the board recruits its next director, the single most important attribute the board will prioritise in the search is industry expertise. Directors cited ‘Long-serving directors’ reluctance to retire’ and ‘Board leadership not invested in board diversity’ as the top factors (34%) impeding board diversity efforts, as well as ‘Over-reliance on director networks to source candidates’ (32%).
%
feel virtual meetings positively impacted meeting efficiency
The jury is out on virtual board meetings
46% of directors felt that virtual board/committee meetings positively impacted meeting effectiveness and 32% felt the same of meeting efficiency. However, 41% reported a negative impact on director engagement and 29% on board culture.
Directors say there is room for improvement for board assessments
56% of directors reported that a board assessment was done within the last year, but 29% noted that these were too much of a “check the box” exercise.
%
believe that performance targets are too easy to achieve
Directors agree executive management and compensation need a second look
61% believe that performance targets are too easy to achieve while 66% don’t believe that incentive plans promote long-term shareholder value.
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