A role for a board’s corporate governance is to oversee and advise the corporation to ensure it operates lawfully, fairly and in its shareholders’ and stakeholders’ interests. The boards do this by remaining independent of the day-to-day operations and management of the company. The board ensures that the strategy plans of the company are aligned with its financial obligations, legal obligations and ethical obligations. It also determines the biggest risks facing the business and the procedures to manage them, and delegate some of these tasks.
Many boards appoint a board chair, whose role is to facilitate meetings and maintain good energy, aswell as to set the agenda. Chairs’ other responsibilities include to inspire discussion and debate and to make sure that important issues get the attention they deserve. Board secretaries also have a crucial role to play, scheduling regular board meetings and making agendas.
In addition, boards are becoming increasingly involved in a range of topics, including strategy and risk management, sustainability, mergers and acquisitions and development of culture and talent. They are also expected to put an increased focus on ESG (environmental social and governance) issues that are becoming important for both consumers and investors alike.
A board’s effectiveness depends on its structure and the members who have a mix of knowledge, skills, and experience. This means that they have a good understanding of the industries which the companies they represent and how those sectors operate. This is essential in their ability to challenge and support management, bringing the company’s strategies in line with the ever-changing consumer and investor expectations.