How a nonprofit business school helps companies overcome challenges to building a robust governance strategy
- A company's ESG strategy is becoming increasingly important in the eyes of consumers and investors.
- But some companies need help. That's where the INSEAD Corporate Governance Centre steps in.
- ICGC provides research, faculty member expertise, and certifications to support governance efforts.
Investors and consumers are increasingly considering an organization's environmental, social, and governance, or ESG, strategies as they choose where to invest, where to work, or where to purchase goods and services. But companies sometimes need extra support in the form of research and training to meet these expectations.
The INSEAD Corporate Governance Centre, or ICGC, provides this support. INSEAD is a top-ranked nonprofit business school whose original campus is outside Paris, with additional locations in Singapore, Abu Dhabi, and San Francisco.
ICGC works with companies, nonprofits, and governmental and educational organizations from around the world — and their leaders and boards of directors — to offer research and expertise from faculty members who have board or consulting experience, webinars and other training materials, and corporate governance certifications.
About 70% of board directors say they're moderately or not at all effective at integrating ESG into a company's strategy or governance, according to a survey by ICGC and Boston Consulting Group. Less than half think their boards are competent and experienced enough to challenge a company's ESG strategies, and many lack knowledge, data, and the capability to provide ESG oversight. ICGC's goal is to help companies develop high-performance governance strategies and drive impact in meeting investor demands and growing profits, Tatar said.
"We address the latest trends, topics, and challenges in corporate governance not only from the academic perspective but also practitioner, a practice-based perspective from real-life experience," she added.
Here's an overview of how an effective corporate governance strategy benefits companies, the challenges organizations face in building a strategy alone, and how ICGC steps in to help.
Helping companies overcome governance challenges to meet investor demand
Boards are the top decision-makers within organizations, representing the backbone of a company's governing system, Tatar said. It's crucial for companies to have a solid governance framework so their boards are high-performing, responsible, resilient, and creating value for investors and stakeholders.
There's growing pressure and scrutiny on boards and companies' corporate governance strategies from internal and external stakeholders, Tatar added. In 2019, 70% of the demands investors placed on companies revolved around governance, including board composition, compensation, accountability, voting rights, and leadership changes, according to a McKinsey & Co. report.
Governance is tied to a company's success or failure since accountability and responsibility are often linked to the board governing the organization, she explained.
She said ICGC helps companies with challenges like upskilling to expand a board's knowledge of new topics like ESG and digitization and preparing and onboarding the next generation of board directors. Family businesses often need help establishing more professional boards for longevity.
Continually reviewing governance strategies helps organizations respond to these demands and can improve operations, motivate employees, boost innovation, and make shareholder relations stronger, according to the McKinsey report.
Providing governance resources and education that drive value
ICGC works with companies via two models: corporate governance training programs and certifications for aspiring and experienced directors and board chairs. ICGC has a portfolio of training materials but also builds customized programs tailored to an organization's needs and goals.
ICGC partners with the European Confederation of Directors Associations, the Ukrainian Corporate Governance Academy, the Hellenic Corporate Governance Council, and the Corporate Governance Hub.
To assist companies, ICGC first learns about an organization's unique needs and determines which program or certification is the best fit. Developing a customized program includes identifying an organization's challenges, bringing in INSEAD experts and faculty, and conducting an analysis with board members and company leaders to uncover what the best outcomes for the company should be.
ICGC provides access to experts, research, reports, educational content, and case studies, as well as board simulations, feedback on leadership styles, executive coaching, and peer-to-peer global board of directors exchange programs.
ICGC's certifications include the INSEAD Certificate in Corporate Governance for board members that operate internationally. Participants take part in training on strategic management practices and financial value creation and write a paper showing how they put what they learned into practice. An advanced certificate is available for those who want to expand their knowledge.
Focusing on governance builds trust and spurs growth
A strong governance strategy creates value for companies. It builds a strong community and government relations, prepares organizations for regulatory and government requirements, motivates employees, heightens investor trust, and inspires consumer confidence, according to a 2019 McKinsey & Co. report.
Tatar said it also makes companies better prepared and resilient for the future, so organizations and boards are "strong forces for improvement" within economic markets and the ESG landscape.
ICGC helps companies ensure boards consist of the best talent that can contribute different perspectives, drive innovation, understand stakeholder expectations, and embrace new trends or regulations affecting them — both short-term and long-term, she said. Companies just have to take action, by assessing the board's composition, strengths, and weaknesses, and identifying gaps where training, upskilling, or changes are needed.
"We help directors stay ahead of the curve, which is a catalyst to drive governance for good to inspire and propel organizations to make a positive impact," Tatar said.