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• Deloitte’s recently published “Emerging Trends in ESG Governance for 2023” report focuses on the primary oversight responsibility for ESG in S&P 500 companies 
• The graph below shows the primary committee responsible for ESG governance based on proxy research of S&P 500 companies

Source:  Deloitte

Key Findings…

• In 2022, only 3% of  S&P 500 companies did not disclose their overall ESG board governance approach, down from 14% in 2021
• While the nomination and governance committee is commonly responsible for ESG, some companies are allocating ESG oversight responsibilities to other committees/full board
• A multicommittee/board ESG framework is on the rise with 51% of the S&P 500 companies stating that that either a) the full board combined with a committee(s) or b) multiple committees have responsibility for overseeing aspects of ESG activities

►  ILMAM’s Optimal Board Program framework can help companies optimize their overall board work cycle, while considering the relevant drivers and trends

• PwC’s 26th CEO Survey: Middle East findings highlights the views of ME CEOs on the outlook for region and own business
• The graph below illustrates the responses of the surveyed CEOs regarding the actions taken or considered in the next 12 months to mitigate against potential economic challenges

Source:  PWC’s 26th CEO Survey

Key Findings…

• According to the survey, ME CEOs are more upbeat about the outlook for their region and own businesses than CEOs elsewhere.
• The majority of ME CEOs said that they are NOT planning to reduce compensation, slow investments, delay deals, reduce their workforce and/or freeze hiring.
• The majority of ME CEOs said that they ARE already or considering diversifying their product/service offering, reducing operating costs, finding alternative suppliers, raising prices and/or revaluating projects/initiatives.

►  ILMAM’s Optimal Board Program framework can help companies optimize their overall board work cycle, while considering the relevant drivers and trends

• Deloitte’s recently published 2^nd edition of the “Audit Committee Practices Report” discusses various matters related to the audit committee priorities and composition
• Below are the replies of the primarily US-based respondents (78%) regarding their organizations’ audit committee top priorities beyond financial reporting and internal controls

Source:  Deloitte

Key Takeaways…

• Beyond the traditional remit, the audit committee also has primary oversight over Cybersecurity, ERM and ESG
• The same areas were identified as top 3 audit committee priorities over the next 12 months
• In financial services, the typically mandated risk committee often has oversight over Cybersecurity and  ERM
• While the primary responsibility for such risks may be delegated, the entire board must remain well-informed

►  ILMAM’s Optimal Board Program framework can help companies optimize their overall board work cycle, while considering the relevant drivers and trends

• Deloitte’s recently published 2^nd edition of the “Audit Committee Practices Report” discusses various matters related to the audit committee priorities and composition
• Below are the replies of primarily US-based respondents (78%) regarding their organizations’ audit committee size and members’ expertise

Source:  Deloitte

Source:  Deloitte

Key Findings…

• Sixty-seven of those surveyed have audit committee with four or less members, with a majority of qualified financial experts
• Financial services organizations have larger audit committees and a higher proportion of qualified financial experts as members
• Elsewhere in report, most of the respondents believe that more cybersecurity expertise, and many non-financial services respondents (33%) believe that industry expertise, are needed on their audit committee

►  ILMAM’s Optimal Board Program framework can help companies optimize their overall board work cycle, while considering the relevant drivers and trends

• This OptimalBoard | Snapshot contrasts the previously covered top 2023 concerns of directors with the top concerns of CFOs from another recent survey
• Below are the top six concerns of directors from NACD’s 2023 Trends and Priorities Survey and the top six concerns of CFOs from the 2022 McKinsey Global Survey on the role of the CFO

Source:  National Association of Corporate Directors (NACD)

Source:  McKinsey and Company

Key takeaways…

• Inflation and supply chain disruption ranked in the top six concerns of both the directors and CFOs surveyed
• COVID-19 ranked below the top six for both directors (5%) and CFOs (12%)
• Unlike directors, CFOs ranked talent shortages low (6%) while also ranking the potential impact of unemployment low (10%)

►  ILMAM’s Optimal Board Program framework can help companies optimize their overall board work cycle, while considering the relevant drivers and trends

• This OptimalBoard | Snapshot contrasts the previously covered top 2023 concerns of directors with the top concerns of CEOs from another recent survey
• Below are the top six areas of concern for directors from NACD’s 2023 Trends and Priorities Survey and the top six areas of concern for CEOs from the  Fall 2022 Fortune/Deloitte CEO Survey

Source:  National Association of Corporate Directors (NACD)

Source:  Fortune/Deloitte CEO Survey

Food for thought…

• Inflation, talent and supply chain ranked in the top six concerns of both the directors and CEOs surveyed
• COVID-19 ranked below the top six for both directors (5%) and CEOs (7%)
• All top six CEO concerns are lower than they were in the June 2022 CEO survey
• Cybersecurity threats ranked significantly lower for CEOs (10%) than for directors (34%)

►  ILMAM’s Optimal Board Program framework can help companies optimize their overall board work cycle, while considering the relevant drivers and trends

• The 2023 Governance Outlook recently published by NACD looked at the key trends that will impact boards in 2023 and how directors plan to adapt
• Below are top board oversight areas where the 300+ directors that participated in NACD’s 2023 Trends and Priorities Survey indicated improvements were important

Note: + or – 100% due to rounding
Source:  National Association of Corporate Directors (NACD)

On top board improvement areas, the survey concludes…

• Strategy development and execution are seen as key improvement areas for boards
• Diversity of experience skill sets, experiences, and viewpoints relevant to the business is another  improvement area
• Elsewhere in the report, many respondents indicated that  their board lacks the capacity/ expertise to oversee areas like climate (41%),  cybersecurity (34%) or geopolitical risk (31%)

►  ILMAM’s Optimal Board Program framework can help companies optimize their overall board work cycle, while considering the relevant drivers and trends

• The 2023 Governance Outlook recently published by NACD looked at the key trends that will impact boards in 2023 and how directors plan to adapt
• Below are the top trends the 300+ directors that participated in NACD’s 2023 Trends and Priorities Survey foresee having the greatest impact on their company over the next 12 months

Note: Respondents selected top five trends each
Source:  National Association of Corporate Directors (NACD)

On top priorities of 2023, the survey concludes…

• Despite the threat of a recession topping the list, increased competition for talent ranks second
• While the impact of COVID-19 ranks low, the growing Inflation and global supply chain disruptions COVID-19  initiated rank high due to ongoing geopolitical instability
• Increased regulatory requirements and changing cybersecurity threats round off the top six concerns

►  ILMAM’s Optimal Board Program framework can help companies optimize their overall board work cycle, while considering the relevant drivers and trends

• McKinsey’s “How effective boards approach technology governance” article from September 2022 discusses typical board technology engagement models
• The charts below illustrate the prevalence level of standing technology committees among Global Fortune 500 companies

Source:  McKinsey & Company

Findings on Board tech committees…

• 27 percent of Telcoms had Board tech committees
• Finance and consumer companies had a notable number of standing tech committees
• Companies with board tech committee had operating margins100–600 basis points higher than their peers
• Only 12 percent of  the Global Fortune 500 companies had standing tech committees as of March 2022
• Most common hesitations for not having a standing tech committee were:
  • not finding the right members
  • the board becoming too operational
  • having too many committees, or
  • crowding out technology discussions within the broader boardroom’s discussion of overall strategy

►  ILMAM’s Optimal Board Program framework can help companies optimize their overall board work cycle, while considering the relevant drivers and trends

• McKinsey’s “How effective boards approach technology governance” article from September 2022 discusses typical board technology engagement models
• Below are the four most common engagement models applied by Global Fortune 500 companies

Source:  McKinsey & Company

Factors impacting engagement model selection…

• Importance of technology to the organization
• Existing board technical expertise and its relevance to the business model
• Pace of technological change/ transformation relative to peers
• Technology risks potentially disruptive to  the business/operating model
• Management’s current effectiveness in addressing key technology issues

►  ILMAM’s Optimal Board Program framework can help companies optimize their overall board work cycle, while considering the relevant drivers and trends