Beyond Covid: risk and resilience among governance trends for 2021

VEA Vice Chair is quoted in a Board Agenda story about governance priorities in the Biden administration and new 50-50 Senate:

If there is one country likely to see an expansion of corporate governance activity in 2021 it is the US, with the upcoming inauguration of Joe Biden and Kamala Harris. The Trump years saw less attention to governance and many would argue the country is some way behind European counterparts on topics such as ESG.

According to Nell Minow of ValueEdge Advisors in New York, that is all about to change. First on the agenda may be a set of new rules passed late last year by the Securities and Exchange Commission and the Department of Labor viewed by many as undermining the scope of shareholders to supervise boards.

The SEC rules forced proxy advisers to hand over their voting advice to boards at the same time as shareholders, while the Labor department rules insist pension funds put the “economic interests” of members ahead of issues like ESG. One SEC commissioner, Allison Herren Lee, described the new rules as “unwarranted, unwanted and unworkable”. Minow says the Labor department’s move is “just horrific” and says countering the new rules is considered “urgent” by the investor community. “You’ll see a lot of pushback there,” she adds.

But that, perhaps, reflects some frustration on the part of many at the lack of progress on ESG issues. Investors, says Minow, are ready to push forward the ESG agenda regardless of what government does or does not do. “There’s a tsunami coming beyond anything that government can do,” she says.

She also points to the likely impact of Elizabeth Warren, a former Democrat presidential hopeful, and her desire to see governance reform. Warren’s party is now in office, it has control of the legislative agenda and Warren has a host of issues she wants to pursue. In October last year she and fellow senators Mark Warner, Tom Carper and Tommy Baldwin launched a corporate governance working group to “fundamentally reform the 21st century American economy”.

On their agenda is greater accountability for executives, more power for workers and stakeholders, and cracking down on companies polluting the environment. They also seek more disclosure of corporate investment in workers and human capital policies. “Elizabeth Warren is extremely knowledgeable about these issues,” says Minow.

Beyond Covid: risk and resilience among governance trends for 2021

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