Cybersecurity breaches, environmental disasters, product recalls, and poor working conditions regularly spark public outrage against faceless corporations. Even as private sector leaders achieve fame by engaging socially and championing brands that claim to improve quality of life, consumers, investors and employees increasingly demand that corporations act in ways beneficial to society. Looking forward, boards of directors will need to remain ahead of rapidly-evolving trends and address deceptively simple questions. What does the company seek to achieve, and where does it see its place in society?

Corporate governance implies ethical leadership through ensuring accurate reporting, sustainable finances, delivery of long-term strategic goals, good relationships with consumers, regulators, and stakeholders, and a safe and functional work environment. Failures of governance impact shareholder value by harming brands, profits, and ability to plan for the future. New technologies and disruptors are running ahead of legislators. The more that corporate scandals trigger regulatory responses, the more money and board time is eaten up by reactive compliance at the expense of strategy, without necessarily showing a return in better or more ethical performance. Less diverse boards may miss new perspectives, trends, and risks entirely.

Courageous directors, many with their roots in entrepreneurship, have unprecedented opportunities to serve as global influencers to remain connected to their communities and popular opinion. The private sector will have a pivotal role to play in achieving the UN’s Sustainable Development Goals by 2030. This can turn a profit and create new jobs – building new and better technology, financing projects to optimize human potential or build infrastructure, opening new markets, and maximizing use of scarce resources or devising new ones. Successful and diverse boards can realize this potential and contribute to better governance, better returns, and better social behavior through institutionalization of global trends, ability to measure and determine exposure to risk (including social and economic factors), and communicating objectives internally and externally.

This third session of the Salzburg Global Forum on Corporate Governance explored the role of the corporation as a good citizen, while assessing techniques to keep boards of directors alert, active, and effective in meeting their fiduciary duties in the current and future landscapes. It explored how directors might emerge as the global thought leaders, to ensure multi national corporations can succeed both in achieving profit and in satisfying conflicting demands of the jurisdictions and societies in which they operate.

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Over the course of the two day program, participants addressed the following issues:

The corporation as a good citizen

• What is the role of the corporation and where is its place in society?
• What defines how a good corporate citizen acts: legislation? governing documents? public pressure? Should the board have the leadership role?
• Can good citizen behavior further the long-run profitability or strategic market advantage of a corporation?
• Can corporations take the lead on issues of public concern, before scandals or imposed regulatory regimes arise? If so, how can corporations best communicate their objectives to the public?

Controlling corporate behavior

• How can a company know whether the tone at the top has penetrated to the bottom? 
• How can a corporation control, measure, and mitigate different risks (including financial market, operational, legal and compliance, security, and reputational risks)?
• Who should be held accountable when there is damage to customers, shareholders, the company, or others?
• Is whistleblowing viable or effective in all national and cultural contexts? Should governments encourage whistleblowing? 
• What disciplinary actions, criminal or civil, should public authorities take against the company, against directors, against management? What remedies are appropriate?
• How should companies enagage with regulators when working in grey areas? Is it better to be cautious or to exploit new openings?
• Should firms offer products or services before there is clear regulatory guidance? Do ethics play a role? 

The role of shareholders in corporate governance

• Where do shareholders have a specified role in different jurisdictions? 
• Will technology facilitate greater shareholder involvement in governance decision-making?
• Does the growing presence of institutional investors portend significant change in the operation of corporations?
• Can shareholder demand for board accountability have more impact than new regulatory frameworks?
• What role should controlling shareholders play? What duties do they have to minority shareholders and other stakeholders?
• What do activist shareholders want, and how should management and the board deal with them?

Ensuring an alert, active, and effective board

• Should board composition reflect the nationalities and demographics of the shareholders, employees, customers, communities served, and supply chains?
• What new skills will directors need to have in the digital age?
• What is the optimal balance for the directors between oversight and strategy? Should the board mentor and develop senior management?
• What conduct or result is executive compensation designed to incentivize and what are effective and appropraite designs to achieve that?

The Salzburg Global Forum on Corporate Governance, launched in 2015, facilitates critical thinking about changing regulatory and economic environments, comparative practices, and the roles and duties of directors. It convenes an annual high-level meeting to focus on key trends and risks in long-standing corporate governance practices in multiple jurisdictions at a time of rapidly shifting societal expectations and political pressures. By providing a neutral setting for cross-cutting conversation across national boundaries on practical standards, expectations, and opportunities, the Forum enables candid in-depth exchanges among participants to advance understanding of corporate best practices and devise concrete recommendations. 

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