PwC's "2022 Annual Corporate Directors Survey" (PwC’s key takeaways online here) of 704 public company directors (27% female/73% male) across industries reveals how board practices are evolving in response to changes in the macro environment and societal pressures in the context of efforts to remain focused on core oversight responsibilities.
Noteworthy findings include:
- Board composition/diversity—Financial expertise on the board leads many other enumerated skills, competencies, and attributes by a wide margin in terms of its perceived importance, with 90% of respondents characterizing it as very important. This compares to 30% that identified cyber risk expertise as very important and just 11% that identified environmental/sustainability expertise as very important, as shown here:
More than 95% of directors said their board has taken actions over the past two years on board diversity—most commonly, disclosing information about the board’s diversity in the proxy statement (69%) and/or replacing a retiring director with a diverse director (67%).
- Peer perceptions—Although 48% of respondents overall said that, in their opinion, at least one of their fellow directors should be replaced (compared to 47% last year), respondents' bases for criticism of fellow directors are extremely noteworthy for what they do NOT include:
- Board/director evaluations—72% of respondents said their board made changes in response to their most recent evaluation process— most commonly by adding additional expertise to the board.
- ESG— Primary ESG oversight is most commonly allocated to the nominating/governance committee or retained at the full board level (36% each). A majority of respondents said that ESG issues are part of the board's ERM discussions (65%); are linked to the company’s strategy (57%); and are regularly on the board’s agenda (55%). However, less than half believe ESG issues have a financial impact on the company’s performance or believe their board needs more reporting on ESG-related measures.
- Climate—At least half of respondents agree at least to some extent that climate should be a management priority even at the expense of short-term financial performance; however, a minority (44%) think their company should be making a net zero commitment.
There are a number of additional noteworthy climate-related findings based on respondent demographics. For example, 66% of female directors compared to 45% of male directors say that reducing the impact of climate change is a priority even at the expense of short-term financial performance. And larger company boards are much more likely to have discussed climate change and carbon emissions (as well as the company’s stance on social issues) over the last 12 months than smaller companies, as shown here:
- Shareholder engagement—60% of respondents said that a member of their board (other than the CEO) had direct engagement with investors during the past 12 months, compared to 53% last year and 42% in 2017. Directors generally gave their engagement with investors high marks for productivity, investor preparedness and understanding of the company’s business, and appropriately focused dialogue. While less than 30% of directors said the company enhanced its public disclosure in one or more areas as a result of such engagement, a plurality of directors said that the engagement prompted increased board discussions on specific topics.