What's Changing? - Governance

 

Please see below selected societal and organisational governance-related change.

 

See also:

• What's New? - Governance

 

August 2023

• Ian Bremmer and Mustafa Suleyman highlighted the challenges that AI presents to traditional governance. Due to its rapid progress and dual-use nature, there’s a need for a novel governance system grounded in principles like agility, inclusivity, and targeted approaches. They proposed three governance bodies: a scientific risk-assessment group, a “Geopolitical Stability Board”, and a third body to bridge the gap between governments and the technology industry. 

 

May 2023

• Harvard Kennedy School professor Roberto Mangabeira Unger, in his book Governing the World Without World Government, made the case for how we should produce global public goods without relying on “globalism” - the belief in the possibility of supranational government.

 

July 2021

• The COVID-19 pandemic illustrated the urgent need for change in the structures and mechanisms of international cooperation. This led to the release of a major synthesis paper -Reflections on building more inclusive global governance - as part of the Inclusive Governance Initiative, which was launched in 2020 to mark Chatham House’s centenary.

 

September 2020

• EY sponsored the Female FTSE Board Report 2020 which launched at a virtual event. The session was attended by senior business and D&I leaders. The research showed that, while voluntary targets have boosted gender diversity on UK boards, there are still too few women in senior leadership positions, such as CEO and Chair, to drive long-term change.

 

July 2020

• There are numerous ways boards can assist their organisations address the post pandemic world, but three that EY considers as providing the foundation for the support structure boards must deliver are:
  • Defining – and living – a strong purpose that drives long-term value
  • Instilling a culture of continuous change
  • Developing a future-fit workforce.
• While these might sound rudimentary, the EY global board risk survey of 500 board directors and CEOs conducted in late 2019, before the pandemic, reveals that boards historically did not consider these as major immediate or short-term concerns, or did not believe it was their responsibility to address them.

 

March 2020

• Most Americans think that the United Nations is doing "a poor job" of tackling global problems, with 54 percent of adults surveyed giving the multilateral body a weak job assessment. Despite this evaluation, 64% still think the UN should play a significant role in world affairs, according to Gallup.

 

January 2020

• Ahead of Chatham House's annual London Conference in June 2020, experts in the International Law Programme contributed to the 2019 edition of Chatham House Expert Perspectives. Bringing together ideas for reforming and modernising global governance in critical domains, this collection of essays examined both whether the concept of a ‘rules-based international order’ makes sense in contemporary contexts and what needs to be done to make it fit for purpose.

 

December 2019

• In many parts of the world, women running for election are still too often disadvantaged by discrimination, intimidation and lack of funding. But globally, the trend is positive. Some countries are doing well. Rwanda, Cuba, Bolivia - all have parliaments with more than 50% women, while others, like Haiti and Qatar, have none.

 

May 2019

• Luis Cabrera, author of The Practice of Global Citizenship (2010), analysed the pros and cons of the idea of a world government:
  • In 1945, he noted, it was the virtually instantaneous atomic annihilation of two major Japanese cities by the United States that led academics, prominent politicians, and social activists to call for a strong world government. The choice was clear, Albert Einstein said, as part of his consistent advocacy on the issue: create one world, or face the prospect of having no world at all. Social movements advocating for global integration soon claimed membership in the hundreds of thousands and, by the end of the decade, both houses of the US Congress had held hearings on whether the United Nations should be transformed into a world government. 
  • The heyday ended abruptly, however. With the onset of the Cold War and ensuing popular anti-communist hysteria, world government became linked to presumed Soviet designs for global domination. Few political figures then dared breathe a word about it, and through the 1990s it was pushed mostly to the fringes of serious academia.
  • The renaissance in thinking about world governments can be traced in part to the acceleration of economic globalisation. The 1999 World Trade Organisation protests in Seattle were a watershed moment. More than 50,000 activists converged from around the world, shutting down the city’s central business district and locking the WTO delegates out of their own opening ceremonies. Many in the streets saw the WTO as a shadow global economic government, setting the rules of international trade for most of the world’s countries, but with little direct input from their peoples.
  • Yet even if full world government is never realised, notes a rights-based approach to integration could give us reason to be optimistic. If the ultimate purpose of governing institutions is to promote rights protections, and higher-level institutions can be made to serve this purpose through social and political struggle, then the more world government that emerges, for Cabrera, at least, the better.

 

February 2019

• The global 2019 Edelman Trust Barometer found that people trust brands and their employers  to respond to societal issues more than governments. 

 

December 2018

• How will we govern ourselves in future is becoming a more urgent question as so many governments failing to find ways forward, maintain credibility, or even to form a cabinet, noted Forum for the Future. 
• Technology may offer new ways to bring many more brains into the picture: coders, designers, writers and citizens are using the opensource platform g0v to make policy decisions, while citizens are using similar platforma to decide how to spend public money.

 

November 2018

• Investors, regulators and other stakeholders are seeking greater board effectiveness and accountability, and are increasingly interested in board evaluation processes and results. According to EY, boards are also seeking to enhance their own effectiveness and to more clearly address stakeholder interest by enhancing their board evaluation processes and disclosures.
• Overall governance in Africa, a measure of how well governments are doing in improving their citizens’ lives, has been steadily rising over the past decade to reach its highest level last year, according to a new report from the Mo Ibrahim Foundation. The problem, noted GZEROMedia, is that broad-based improvement masks large differences within the continent. 
• Further reading:
  • Global Governance and the Emergence of Global Institutions for the 21st Century - Global Challenges Foundation

 

October 2018

• While demand for global governance has not diminished, the same cannot be said about support for binding multilateral arrangements. Bruegel analysed the recent setbacks and explored potential strategies for global governance to better accommodate the diversity of players.
• As world powers renegotiate economic, military and diplomatic fault lines, and new technologies disrupt established societal and political norms, the rules based international system of governance appears to be in a state of flux, warned Chatham House. Global developments seem increasingly difficult to predict and world leaders can no longer rely on the same principles, conventions and institutions that have governed international relations for decades.
• As polar ice melts, the Arctic will become increasingly important for its untapped oil, gas and minerals as they become more accessible, as well for its shipping routes, which will become increasingly cost efficient for cargo as parts of the routes become ice-free for extended periods. A number of countries, including Russia and China, are also exploring the possibilities around overflights, commercial fishing, the laying of submarine cables and pipelines, and scientific research. For Chatham House, Beijing wants to present itself as a responsible power with a role to play in Arctic governance, as part of a broader ambition to become a shaper of global rules and institutions.

 

September 2018

• Though the UN is not capable of acting as the world’s policeman, Quartz believes that it does still do the vital work of collecting reliable information, conducting investigations, and demanding accountability, raising international scrutiny on violations even when it can’t address them directly. The world’s powers need that scrutiny, though before it loses credibility, the organisation must do a better job of policing itself.
• The UN's annual General Debate kicks off. Every nation gets the chance to address the UN, and more than 80 heads of state and 44 heads of government are attending this year.
• Meanwhile, Quartz examined how the UN gets its funding. Nations, however, aren’t the only sponsors of the UN. The Bill and Melinda Gates Foundation has given significant amounts of money to the organisation. Over the past three years, the charitable foundation has contributed almost $300 million annually, putting it 25th on the list of highest funders, just after Argentina - read more here.
• More than 150 new embassies have been established in sub-Saharan Africa since 2010, according to the University of Denver’s Diplomatic Project. While the US still leads the pack with embassies in 48 African nations, Turkey opened up 16 new diplomatic posts and Qatar 12 there in the past eight years, reported GZEROMedia.
• We see elites as privileged, and undemocratic, and typically up to no good, claimed IAI. Yet elites run our schools and our hospitals, our science research labs and our armed forces. Should we therefore stop seeing 'elite' as a term of abuse and require elites to run our politics and media, or is every elite to be challenged and potentially eradicated?
• EY warned that as AI and machine learning proliferate, AI technologies are rapidly outpacing the organisational governance and controls that guide their use. External regulators simply can’t keep up, and enterprises are grappling with increasing demands to demonstrate sound and transparent controls that can evolve as quickly as the technology does.
• Argentine President Mauricio Macri revealed a plan to cut the number of government ministries in the Latin American country by more than half, part of a broader belt-tightening intended to restore investor faith in the country. 

 

July-August 2018

• Our governance model is broken, we live in a ‘systemocracy’ – a world of massive inter-dependency yet we are holding on to 19th century versions of governance, argued Dark Matter Labs.
• With policy becoming harder to predict, many executives see policy uncertainty, geopolitical tensions, and changes in trade policy and protectionism as key risks to their business, found EY's Anticipating and planning for geopolitical and regulatory changes report.
• Powerful forces are transforming societies everywhere, but the structure of most governments remains unchanged. The public sector must move away from its siloed design to create a more agile organisation, or risk a precipitous decline in effectiveness and legitimacy, according to a new report by The Boston Consulting Group, A Blueprint for the Government of the Future.

 

June 2018

• According to the 2017 Edelman Trust Barometer (see graph, 63% of respondents believe that CEOs are not credible; while 78% of people think that businesses are unlikely to do the right thing in their community according to a 2016 study by the UK Institute of Public Policy Research. At the same time, the 2016 FCLT Global study revealed that the pressure to demonstrate strong financial performance within two years rose from 79% to 87%. EY therefore argued that while the need for boards to focus on the long-term value of their organisations is by now well known, communicating this clearly to stakeholders is crucial if they are to regain public trust and remain sustainable.

 

Pre 2018

• Global governance, good governance, failing governance: like so many buzzwords in the field of international development, the word has come to mean different things to different groups. So what is it, asked the World Economic Forum? In its purest form it describes the structures and decision-making processes that allow a state, organisation or group of people to conduct affairs. The most obvious among these is the government running a country, as well as the administrations and groups that ensure its safety and efficiency. But it’s not just governments that govern: institutions such as the IMF, World Bank and United Nations, for instance, have an authority that is recognised the world over. These bodies take a multilateral approach to world affairs, bringing together leaders of public and private sectors, as well as members of wider society, to achieve commonly accepted goals and tackle threats to international security. The business sector is another piece of the puzzle, mostly concerned with how companies regulate themselves and contribute to the regulation of global frameworks.
• The time is up for non-executive directors, warned The Financial Times. Through successive corporate crises and systemic catastrophes, despite — and in part because of — layers of codes and regulations, independent board members have failed to do the impossible job handed to them by complacent fund managers.
• The speed of change is accelerating rapidly in every industry, and the list of S&P 500 companies has become a moving target, with the average age shrinking from 60 to 15 over the past half century. "Successful boards today must excel at providing not only oversight and insight, but foresight as well," says Susan Angele, a senior advisor at KPMG's Board Leadership Centre and chair of the WomenCorporateDirectors (WCD) Foundation's Thought Leadership Commission. "Building and maintaining a visionary board is a journey, and every board starts in a different place. This report is designed so that all directors, no matter where they begin, can find insights and practical suggestions to help them on their journey."
• PwC argued that many corporate failures in recent years - from the global financial crisis to high profile media stories involving major brands - have taken place due to poor governance, unhealthy organisational cultures and a lack of personal accountability at senior levels within organisations - leading businesses to look for active steps they can take to prevent a repeat. To address this, regulators have launched a new set of rules known as the Senior Managers Regime (SMR) to drive forward a culture of personal responsibility and individual accountability in the financial services sector. Senior managers, including those in C-suite and non-executive positions in businesses within FS are now required to take reasonable steps in their areas of responsibility with personal accountability now attached to these requirements – and the impact of these changes is likely to extend into non-FS businesses too.
• The definition of an ideal board of directors is changing, argued strategy+business. It’s not just a representative group of major shareholders or constituents; a group of activist gadflies second-guessing the CEO; a committee to rubber-stamp the CEO’s policies. It is a group of people who take seriously the future of the company, who are attuned to its ever-changing business context and who can talk openly and creatively together about the company’s prospects. Improving the quality of board conversations is a high-leverage way to improve the strategic prospects of a company. A series of new s+b articles suggested some starting points for change: see Bringing Tech Insight to Corporate Boards; Women in Leadership, Expanding Influence and Leading Change and Your Next Board Member Should Be a Geek.
• The EY Centre for Board Matters (CBM) launched a new online resource, Corporate Governance by the Numbers, that will, claims EY, provide timely data topics in corporate governance, such as director elections, board composition, board and executive compensation, shareholder proposals and voting results. These insights come directly from the CBM proprietary corporate governance database, which collects and analyses data for more than 3,000 public companies, and it will be updated on a monthly basis.
• Corporate boards have begun to form committees to focus on ethics and values as well as corporate responsibility and sustainability, as part of a move to tackle non-financial risks more effectively, according to a new survey by the UK Institute of Business Ethics (IBE) in collaboration with ICSA, the professional body for governance, and Mazars. The research showed that 55 companies in the FTSE 350 have formed such committees with published terms of reference, and that over half of them (67%) were specially charged with advising the board on ethics and values and how these can be embedded within the company. Most (69%) have an independent non executive director as chair. The research found that committees serve a number of different purposes. Broadly these range from reputational issues around corporate responsibility to compliance with non-financial regulation such as health and safety and legislation to do with bribery.　 
• A surge in socially responsible investments to $59 trillion globally over the past decade is nudging Asian firms to change a notoriously insular management style to one that actively addresses corporate governance concerns, claimed Reuters. As earnings growth and China's economy slow, corporate executives are becoming more receptive to the investment messages from funds committed to environmental, social and governance principles.
• From combatting cyber threats to evaluating risk and retaining talent, board members will have to address what has become a greatly expanded agenda in 2016, according to EY LLP’s Center for Board Matters. The widening purview of board responsibilities takes place even as shareholders pay closer attention to directors’ actions. Recent research examined the skill sets of directors at large companies as they face this expanding range of challenges. Equilar Inc., a compensation data firm, looked at S&P 500 company filings that contain a “skills matrix” for corporate directors. It found that 62.5% of directors had financial expertise, the most prevalent skill cited. The Equilar data showed 59.4% of directors were skilled in the industry of the company on whose board they sat and 46.9% of directors had international acumen. Nearly 44% of directors were senior officers and a like percentage, 43.8%, possessed government, public policy or regulation expertise. Companies reported that 34.4% of directors had leadership ability and 31.3% were skilled in marketing and public relations.
• New actors - partners, clients, and citizens - are now stakeholders in information governance strategies for customer-obsessed enterprises, argued Forrester. Enterprise architects and their peers in security, legal, compliance, and business functions must step up their collaboration to deliver on policies that serve enterprise objectives. Senior technology and business managers are reshaping traditional information management roles to put governance programmes on a fast track to success.
• In 'Top Board Priorities for 2016', EY argued that organisations are faced with many critical challenges - including rapidly changing technology, environmental risks, regulatory and legal requirements, major shifts in markets, ethical breaches, and big data and cybersecurity issues - that threaten their long-term success and sustainability. Directors have a unique opportunity to step forward and proactively oversee the development and implementation of effective, long-term strategies responsive to these challenges. As a result, the trend of expanding board agendas will continue in 2016.
• Men still dominate the executive and senior management ranks of major companies even as women have made headway on boards, according to an analysis of some of the biggest companies in Europe and the US. The progress in increased representation for women in non-executive boardroom roles has not been matched in executive promotions, research by executive search firm MWM Consulting revealed.​
• 'Corporate governance is constraining CEOs in China', claimed that CEOs of the Chinese arms of multinational companies are facing an increasingly challenging business environment. Chinese growth is slowing while regional stock-markets have taken a turn for the worse. Dealing with the situation is hampered for many, according to a recent McKinsey survey, by the need to align key business strategies with those higher up the management chain – executives who in many cases do not find themselves in the best position to oversee key decisions and guarantee agility.