Last week I listened to a panel of speakers call for greater board focus on ethics and compliance. The audience in front of them agreed heartily. What was extraordinary is that this was not a compliance conference. Nor was it a bunch of critics of business.
The panelists were Nell Minow, a leading expert on governance, past-SCCE Compliance and Ethics Institute speaker and Vice Chair of ValueEdge Advisors, Rakhi Kumar, Managing Director and Head of Corporate Governance for State Street Global Advisors, and Victor Mandel, Director and Chairman of the Governance and Nominating Committee of Ambac Financial Group. The audience was made up of pension fund trustees. In short, big, big shareholders of corporations. Not compliance people.
It’s a profound change of view. As the panelists explained, boards today exist not just to provide counsel to CEOs and manage the hiring and firing of them. They are now much more active in oversight of the company, including its compliance and ethics program. At the same time, investors can no longer ignore ethics issues since they have such a strong effect on the bottom line. This, in turn, means that board members can ill afford to neglect ethics and compliance either.
What does this say to those of us in compliance and ethics? It tells us that we can expect boards that are more interested in what we do. Compliance will likely be seen increasingly as a safeguard of corporate value, and not just the corporate values statement.
It means that board members need to understand what makes for an effective compliance program, and what doesn’t.
It means that companies where the board isn’t well educated may be at greater risk of both compliance failures, and may also have to face a skeptical, if not hostile, investment community.
Finally, it means that the first SCCE Board Audit and Compliance Committee Conference (Scottsdale, November 9-10,2015), aimed at boards and their compliance professionals, could not have been better timed. With more eyes than ever focused on the board, and with boards interacting with compliance professionals more than ever before, it’s essential that the board understands its role, and that compliance professionals understand the board’s obligations.
The conference gives a unique opportunity for both compliance and ethics professionals and board members to sit together, learn from the presenters and spend time with each other. Don’t miss it, and make sure your key board contact doesn’t either. Investor expectations are rising.
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