The answer to my provocative question depends on the meaning given to the expression. No, if we consider the caricature made by the hard right in the United States. Yes, if we take the direction of a report on the future of corporate governance in Canada.
If we give back to the word woke its sense of being “awake”, obviously administrators have long been asked not to sleep on gas. But they are now expected to “wake up” to a wider range of social and environmental issues.
Corporate governance refers to the set of rules and behaviors of a board of directors, including its relationship with the CEO to establish strategy and oversee its execution.
Governance has become more demanding over scandals, regulations and several reports that have proposed best practices. In Canada, the Dey report, in 1994, had recommended the separation of the functions of chairman of the board and chief executive officer. In 2001, the Saucier report emphasized the culture of director independence from the CEO.
In December, under the auspices of TMX Group and the Institute of Corporate Directors, 13 experienced directors, including Monique Leroux, former president of Desjardins, and Heather Monroe-Blum, former president of McGill, released a report entitled “The Future of Canadian Corporate Governance”1.
This time, no specific recommendation to the Dey, but principles that administrators must adapt to the particular situation of their organization.
Finding from Chapter 1: “Companies must learn to find success in a world that rewards not only investors, but also all those who are interested in their activity, whether they are employees, suppliers, customers or local communities. In short, “a participatory capitalism, by and for the stakeholders”.
The company must pay particular attention to the diversity, equity and inclusion (DEI) of women and minorities. Partly in response to the shocks of the Black Lives Matter movement and the discovery of residential school burials, but perhaps more out of the realization that diversity fosters a deeper understanding of the issues, and therefore better employment decisions. business. More bluntly, the shortage of labor suppresses many prejudices.
Obviously, not all the stakeholders can be gathered around the board table, but the company must identify the most relevant in its field and dialogue with them.
The same exercise should be done with shareholders, preferably those with a long-term view, without ignoring activist investors who are pushing for quick action.
The second chapter deals with the essential ESG factors: “Companies must address the environmental and social issues that are most important to their stakeholders, over which they can exercise control and with regard to which they can have the greatest impact. »
The authors believe that criticism of the political divide in the United States will cross the border, complicating and slowing progress on ESG topics. Perhaps because of the backlash, this passage of the report is the only one to use the word wokealthough his spirit shines through in many places.
For example, “Business leaders should be aware that climate change is likely only the first in a series of ESG issues that will eventually be viewed as risks, but also as opportunities. [d’affaires]which will require strong action and information sharing”.
Tackling these new challenges is not a sign of a softening of management, distracted by fashionable causes, but rather of taking into account the changing environment of the company, without neglecting the considerations economic, which remain central.
The company must both “achieve strong financial returns for shareholders and perform well on the ESG measures that are at the heart of the concerns of other stakeholders”.
As for the G in ESG, governance practices have made great strides. However, sustainability reporting regulations and standards will impose broader responsibilities on directors on environmental and social issues, which “are more sensitive and pose greater challenges for companies”.
The report has eight other chapters on more traditional governance topics, such as strategy and risk management, which are impossible to summarize in this column.
The authors do not offer a recipe, but invite directors to think deeply regarding the company’s mission and how best to accomplish it in a multi-stakeholder world.
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