Board development, capacity building the biggest concerns among Asean boards

Some 63% of boards in the regions think both are required to effectively internalise ESG concepts

by FAYYADH JAAFAR / Pic by BLOOMBERG

THE boards of Asean companies see the need to do things differently to safeguard organisational resilience and create long-term value as innovation, digitalisation and sustainability are among the top priorities in 2022.

The Institute of Corporate Directors Malaysia (ICDM) joint survey report with six other Asean based Institutes of Directors found 63% of boards in the region think board development and capacity building are required to effectively internalise environmental, social and governance (ESG) concepts.

“One of the key takeaways is that Asean boards are aware of the need to do things differently in the coming year. The challenge, however, is the lack of required competencies — both technical and behavioural — on boards to ensure effective oversight of the identified areas,” ICDM president and CEO Michele Kythe Lim said at the release of the 2022 Asean Board Trends Report yesterday.

The report is based on a total of 114 comprehensive responses across Malaysia, Vietnam, Singapore, Thailand, Indonesia, Myanmar and the Philippines, covering senior leaders including board chairs, board committee chairs, non-EDs, EDs and CEOs or presidents.

Some 72% of the respondents were negatively impacted by the Covid-19 pandemic with 25% believe they are a long way from getting back to pre-pandemic levels in 2022.

Some 44% of respondents were more positive, expecting their companies to perform better than at pre-pandemic level or at least back to the pre-pandemic level next year.

Organisation-wide innovation and digitalisation dominate Asean directors’ top boardroom priorities,with 54% of Asean boards seeing improving business model agility, diversification, transformation and innovation as a key strategic priority to drive success in the medium term.

This is followed by board effectiveness and board development, each with 53%, and risk management and compliance, each with 50%.

Innovation and digital skills remain a gap in the boardroom as 67% of boards believe more training is needed to improve deliberation around innovation, modernisation and transformation.

Board refreshment is also a key boardroom priority as Asean boards recognise the importance of board refreshment (51%), board evaluations (47%) and continued developmental programmes (46%).

“With evolving business risks, stakeholder expectations are expected to intensify — especially in the areas of sustainability and ESG. Boards should thus cultivate a forward-looking mindset and the right organisational culture to turn risks into growth opportunities for long-term sustainability.

“A paradigm shift to a progressive, sustainability-driven governance model is necessary for companies to further catalyse their overall growth,” added Lim.

The report noted that there are more opportunities for boards to foster a culture of constructive dissent and encourage diversity of thought, as there is a growing importance to board independence, with Asean directors believing their companies would benefit from a multi-generational boardroom with independently minded directors (65%).

There are also four elements ICDM recommends to be considered when developing a sustainable board, which include developing a broader understanding of the growing risk network and approaching risks from multi-dimensional viewpoints; cultivating a digital culture that prioritises people and collaboration, helping teams find clarity amidst uncertainties and be equipped to make fast yet effective decisions; emphasising on delivering value to stakeholders; stakeholders as active participants in the decision-making process to align organisational purpose and values as well as promote a culture of shared accountability, transparency and integrity; and rethinking old certainties to keep an open mind for unknown possibilities and inculcating a culture of experimentation.