More than half (52%) of company board meeting time were spent on operational topics, a recent survey by the Luxembourg’s Institute of Directors (Institut Luxembourgeois des Administrateurs, ILA) and governance technology firm Diligent shows.
The report, “The State of the Luxembourg Boardroom 2021”, is based upon the responses of around 100 ILA respondents, representing independent directors, non-executive directors and corporate secretaries.
Of the boards surveyed, nearly 93% believed they have adequate governance and risk frameworks in place to face their key challenges, and three-quarters (75%) discussing and evaluating key business strategy annually.
Although half (50%) of Luxembourg’s boards of directors believed they had an adequate balance regarding how they address short, medium and long term objectives, a similar proportion (43.9%) recognised they still struggle balancing focus on longer vs. shorter term objectives during their board meetings. As for environmental, social and governance considerations, almost all boards in the Grand Duchy (90%) had plans to devote more energy to these matters in the coming year. As two-thirds (67%) planned to do so despite feeling they lack the full range of expertise needed to adequately address these sustainability considerations, this will need to be coupled with upskilling of their Boards or even review of Board composition.
There is also awareness of the need to be a good corporate citizen, alongside the need to create good products that will sell. The top three ambitions for boards were “to be a sustainable business over time,” “increase operational efficiency and maximise profit,” and “be a role model for reliability and quality.” There was also awareness of the need to achieve and maintain board diversity, with 91.8% having agreed that this increases board effectiveness.
Carine Feipel, ILA Chair, said: “A lot goes on behind the scenes of an effective board, and much of that effectiveness relies on the supporting structure that a good governance framework provides. A relevant and appropriate framework that has been clearly defined and well documented is essential for providing the basic guidelines for decision-making and ensuring board discussions are productive and flow smoothly.”
Jane Wilkinson, ILA Think Tank Committee member and co-author of the survey said: “It is ILA’s intention to repeat this survey on a regular basis to highlight evolution in corporate governance practices, and also to highlight emerging topics which should be on every board’s agenda.”