Director nomination practices
Investors play a key role in the election and overseeing of corporate boards, ranging from direct involvement in nomination committees to exercising their voting rights. Company law and corporate governance codes in many regions contain provisions on director nominations; however, these differ from region to region. The 2008 global financial crisis highlighted the failure of many boards to exercise appropriate oversight, and called into question the ability of institutional investors to hold directors accountable. Improving how boards are nominated and elected, and ensuring that boards work effectively to protect and create long-term shareholder value, is therefore a key concern.
A steering committee of 10 PRI signatories from different regions is currently collaborating to gather more information on the director nomination processes of seven countries, including France, Sweden and Italy, exploring the themes of transparency, independence, effectiveness, the role of institutional investors, and how to engage with regulators and other policy-makers. After selecting three countries where most issues still prevail, the group will invite other investors to engage collaboratively with a selected list of companies in these markets.