The Quoted Companies Alliance’s (QCA's) recent survey on the role and value of Non Executive Directors (NEDs) shows that a majority (60%) of respondents feel the subject of Cyber and IT is an area where their boards lack expertise. A significant proportion (34%) also feel that Environmental, Social and Governance (ESG) is an area where boards lack expertise.
Although BoardEx data shows boards have improved in terms of gender diversity, companies still have some way to go to meet the expectations of regulators and potentially their investors.
Sector specific experience, accounting and governance knowledge are identified as strong points for NEDs. This reveals that it is indeed the emerging issues of environmental and social good practice that companies feel their boards lack rather than governance itself.
A majority of respondents (between 57% and 86%) report strengths in seven out of nine areas of expertise, showing that they believe their boards members are generally well equipped.
Tim Ward, Chief Executive, the Quoted Companies Alliance said:
“Identifying areas of weakness is a useful practice for companies but the key is fixing those shortcomings to create real change. For most boards, emerging issues like the environment and social impact together with cyber are areas where they see they have weaknesses. This ties in with the issue of diversity. More diverse boards will undoubtedly broaden the skill set for company boards and will help to close the gaps in these areas. It is important that companies seek to take an objective approach to hiring Non-Executive Directors in order to ensure their pool of potential candidates is wide and doesn’t solely rely on personal networks that may inherently lack diversity.”
Read the QCA Non-Executive Director Report here.
