A role for a board’s corporate governance consists of overseeing and advising the corporation to ensure it operates in a fair, legal manner, and in its shareholders and stakeholders’ best interest. Boards accomplish this by operating independent of management and day-to-day operations. The board ensures that the company’s strategic plans comply with its legal, ethical and financial obligations. It also identifies the most significant risks to the business and the procedures for managing these risks, while delegating a portion of these tasks.
Many boards appoint a board chair, whose role is to facilitate meetings and maintain an atmosphere of harmony, as well as to set the agenda. Other responsibilities of the chair are to stimulate discussion and debate, and ensuring that important issues receive proper attention. Board secretaries also are essential in organizing regular board meetings and making agendas.
In addition, boards are becoming increasingly involved in a range of topics, including strategy and risk management, sustainability, potential mergers and acquisitions as well as development of culture and talent. They are also expected to have a particular attention to the ESG (environmental, social and governance) aspects that are becoming essential to investors and consumers alike.
A board’s effectiveness depends on its structure and the members’ mix of knowledge, capabilities and expertise. This means that they have a solid understanding of the industries which the companies they represent and the way in which those industries operate. This is crucial in their ability to confront and support management, bringing the company’s policies in line with evolving investor and consumer expectations.