The report found 45% of directors want someone on their board replaced, just over half (54 per cent) say ESG issues are linked to companies' strategies, while 49 per cent of directors see cybersecurity as a significant oversight challenge.
PwC’s Annual Corporate Directors Survey interviewed 619 directors from across the United States about corporate governance matters. The respondents represent a cross-section of companies from over a dozen industries, 72% of which have annual revenues of more than $1 billion. Seventy-two percent (72%) of the respondents were men and 28% were women. Board tenure varied, but 64% of respondents have served on their board for more than five years.
‘Gender disconnect’ on ESG issues
In the report, more directors say they are prepared to oversee ESG disclosure, but only half see the link between ESG and company strategy.
Just over half of directors say their board is sufficiently prepared to oversee forthcoming mandatory ESG disclosures, up from 25% in 2022. But ever fewer directors feel that ESG issues are linked to strategy.
The report says while the impact of any given ESG topic on a company varies greatly by size, geographic footprint, industry and more, some stakeholders (state governments, investors and activists) have pushed back on the perceived ESG ‘agenda’ and that the term ‘ESG’ has even been scrutinized, with a move toward using the term sustainability.
Directors also said their boards are discussing climate change somewhat less and the report found there a ‘gender disconnect’ on ESG issues, with female directors more likely to see ESG issues as linked to company strategy and having a financial impact on company performance.
Board diversity ‘driven by political correctness’
The report found that while most directors agree that diversity brings unique perspectives and enhances board performance, more than half believe that diversity efforts are driven by political correctness; about one third suggest that diversity efforts put less-qualified candidates on the board.
It found the gender divide on the importance and impact of board diversity has deepened. While every surveyed female director now views gender diversity as important for boards, a record- low percentage of male directors agree.
The survey shows that boards generally agree on the benefits of having a diverse set of directors, with many have taken action in recent years to demonstrate this belief. Specifically, over the last two years:
• 71% of directors say their companies disclosed information about board diversity in proxy statements
• 66% say their boards replaced a retiring director with one who increases the board’s diversity
The report states: While boards have made strides to increase diversity, there’s still room for improvement. Specifically, directors should seek a diverse slate of candidates when interviewing for a new position and be proactive in board succession planning; only 15% of directors tell us they amended/ modified their board’s succession plan to ensure increased diversity in the future.
Directors more cyber confident
The percentage of directors who feel cybersecurity oversight is a significant oversight challenge for their boards went down from 59% in 2022 to 49% in 2023. In the wake of focus from regulators and other stakeholders, boards and management teams have been stepping up the frequency and depth of cybersecurity-related discussions and disclosures.
According to the report, a significant percentage of directors said their boards have taken actions in the past year related to cybersecurity.
“We’re seeing cybersecurity as a more frequent agenda item, now most commonly being discussed at every meeting. Hearing more from CISOs and having more agenda time is certainly a step in the right direction.”
Read the full report HERE