Blog

8 September 2020

What COVID-19 made clear: corporate governance needs to focus on the right risks By Olivier Boutellis-Taft

This is the second blog of our COVID-19 sustainable recovery series. Read our first blog 4 steps to a sustainable recovery from COVID-19 to find out what our CEO, Olivier Boutellis-Taft, envisages a sustainable recovery to look like.

Is corporate governance just a set of rules that we must reluctantly follow? Some seem to think so, focussing only on the burden and cost. They fail to see the added value of having proper governance in place.

I see corporate governance as the foundation for company purpose, strategy, opportunity and risk management. It enhances the quality of leadership and decision-making. The cogito publication 10 ideas to make corporate governance a driver of a sustainable economy has more on the central role corporate governance can play in redefining how businesses are run.

Corporate governance becomes even more important in the current context of environmental crisis, global pandemic, looming recession and social unrest. It helps us identify and respond to the right risks. We need to realise we are quite bad at risk management. We were totally unprepared for the pandemic, even though scientists and the World Economic Forum had been warning us.

We need to use the lessons that the COVID-19 pandemic has taught us and start looking at the right risks, meaning: climate, biodiversity loss, natural disasters and human-made environmental disasters.

The COVID-19 lockdowns made CO2 emissions drop by a historical 6%. But this has appeared to be only temporary. And we would need to keep up this decrease every year for the next ten years to maintain a liveable planet. This reduction did not result from structural change and we seem to be striving to go back to business as usual.

So, what does this mean for corporate governance? We need to change our priorities and start by identifying the right risks. There is no point arguing over shareholder versus stakeholder value while we continue to destroy the conditions for life on earth.

This crisis shows once again that it is time to transform the way we do business. Therefore, the priority for Boards is to review the business model and think in new ways about risk management and resilience. This requires a lot of diverse and lateral thinking and boards will benefit from engaging with unlikely bed-fellows from climate scientists to socio-psychologists and biostatisticians .

If boards take on the responsibility to fully leverage corporate governance to manage the biggest risks and transform their company’s business model, there is hope for us to survive and reduce the damage to our planet. From my side, this is the best lesson that we can all learn from the COVID-19 crisis.

Related content

EventPostponed: The path to high-quality non-financial information assurance

1 October 2020

NewsAccountancy Europe welcomes cooperation by sustainability reporting bodies

23 September 2020

Consultation responseEC’s roadmap on obligation for companies to publish non-financial information

18 September 2020

Blog4 steps to a sustainable recovery from COVID-19

6 August 2020

Consultation responseIIRC’s 2020 Revision: Framework

31 July 2020

Consultation responseIAASB’s consultation on proposed guidance: extended external reporting (EER) assurance

24 July 2020

Podcast Public sector and the coronacrisis (Part 2)

17 July 2020

Consultation responseEC’s consultation on the renewed sustainable finance strategy

15 July 2020

PublicationSME risk management: sustainability

15 July 2020

Podcast Public sector and the coronacrisis

3 July 2020

Consultation responseEC’s consultation on a new digital finance strategy for Europe/FinTech action plan

30 June 2020

UpdateSustainable Finance

30 June 2020

EventEurope’s economic recovery from COVID 19

30 June 2020

NewsJoint statement on the revision of the non-financial reporting directive in the context of Covid-19

23 June 2020

PublicationCoronavirus’ impact on ongoing audits

19 June 2020

NewsAccountancy Europe leads the non-financial reporting debate

17 June 2020

PublicationFollow-up paper: Interconnected standard setting for corporate reporting

15 June 2020

Consultation responseEC’s consultation on the Non-Financial Reporting Directive revision

15 June 2020

Podcast Europe and the coronavirus crisis: what’s next?

12 June 2020

PublicationSetting up for high-quality non-financial information assurance in Europe

12 June 2020

Sign up for our newsletter

* indicates required
Would you like to subscribe to our newsletter?
On which topics would you like to receive news?