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Latest findings from PwC’s Pulse Survey
Corporate directors are maintaining their focus on overseeing strategy, talent and cybersecurity, and more than three-quarters of board respondents to the latest PwC US Pulse Survey take an optimistic view of the pandemic response and global economic recovery.
Meanwhile, director focus is shifting to environmental, social and governance (ESG) issues in response to calls from all stakeholders. Issues like diversity and inclusion (D&I) in particular continue to gain prominence on board agendas in response to recent social unrest, increased investor focus, new human capital management disclosure requirements and state laws mandating board diversity.
On the flip side, issues like crisis management and board culture rank low on directors’ priority lists, and climate change isn’t resonating to the same extent as other ESG topics.
Issues like company strategy (68%), technology/cybersecurity (57%) and talent management (42%) are top of mind right now. However, with a post-pandemic economy coming into view, boards are moving on from crisis management. Only 11% of directors ranked crisis management as a top priority in the survey. The findings echo those seen in PwC’s 2020 Annual Corporate Directors Survey in which only 37% of directors said their board fully understands their company’s crisis management plan. Although companies may be moving past the initial COVID-19 crisis, these actions may be coming too soon. Given recent global events and noting that a crisis can hit at any time, now is the time for boards to revisit crisis plans and revise them, looking at what worked and what hasn’t, while the lessons from the current crisis are still fresh.
Another significant consideration raised by the pandemic is the huge shift in how people work, including directors, yet directors ranked managing board culture in a virtual world low on the list of priorities (7%).
Virtual board and committee meetings are likely here to stay in one form or another. Some boards already plan to adopt a hybrid model of conducting some meetings in person and others remotely. The cost savings and convenience of those hybrid plans may be attractive. But boards need to start thinking now about how to compensate for what might be lost, such as the ability to form relationships with new board members, conduct informal conversations with management, and maintain energy and concentration during long meetings — all of which can become more difficult in a virtual setting. If directors aren’t thinking about how remote meetings are impacting culture, they could miss a significant board effectiveness issue.
Right now, boards say their companies are very focused on several ESG-related issues, with diversity and inclusion (D&I) reporting ranking among the top concerns (68%). Approximately half of respondents said they expect to enhance review of ESG disclosures. As companies become more transparent about their workforce’s racial and gender breakdowns, boards have a renewed opportunity to encourage progress.
Nearly half of director respondents say their company is also planning to increase other D&I initiatives like board diversity, company-endorsed public statements on social and environmental issues and D&I training.
Making progress on D&I initiatives starts with treating them like any other business initiative. Boards should begin by collecting the data they need to know where the company stands on D&I issues, before setting milestones to help ensure it’s on track to achieving its diversity, equity and inclusion goals. Ultimately, transparency is the key to bolstering accountability with investors, customers and other stakeholders.
Only 6% of directors said their companies have no plans over the next year to make changes in regard to ESG-related factors, including diversity issues, privacy-related matters and environmental issues.
With the Biden administration’s goal to make the US carbon neutral by 2050 and recent SEC regulatory scrutiny, companies will need to make climate change a key focus. Almost half of directors (45%) expect their companies to increase their public statements on social and environmental issues. But there’s still more work to be done.
While 77% say their company is ‘very focused’ on data privacy and security, only 31% of directors report their companies are similarly focused on climate change measures such as reducing carbon emissions and addressing the effects of water stress. Regardless of a company’s location and business model, climate risks pose a significant threat to financial performance. That’s one reason why investors, customers, employees and other stakeholders are calling for greater ESG disclosures. And a growing number of directors seem to agree that it’s important. In our most recent Annual Corporate Directors Survey, 67% of board members say climate change should play a role in corporate strategy development, up from 54% in 2019.
More than 100 directors from Fortune 1000 and private companies, along with more than 600 other C-suite executives, ranked their corporate priorities in our latest PwC US Pulse Survey, fielded from March 8 to March 12, 2021. Find all of these insights in our PwC US Pulse Survey.
Vaccine rollouts are bringing the end of the pandemic economy into view just as the Biden administration is looking to implement its agenda — fast. Is your company keeping up? Hear the results of our latest PwC Pulse Survey and learn what business leaders are saying about their growth prospects and investment priorities for 2021.