External 3rd Party Management

Corporate Governance covers a broad range of business activities including board and management structures as well as a company’s policies, standards, information disclosure, auditing and compliance. Like they do for environmental and social factors, investors are increasingly avoiding companies whose governance policies and practices expose them to unacceptable levels of risk. It can be a company that is involved in legally or ethically questionable practices, or one that doesn’t adequately address long-term risks to its business, such as the risks presented by climate change. On the other hand, companies with strong and transparent governance policies and practices attract a high level of investor interest. There are a number of areas that are top of mind when it comes to corporate governance. For example, executive compensation and incentives is an ongoing public issue as is gender diversity and gender equity with many institutional shareholders demanding better representation of women on corporate boards and in executive ranks, and equal compensation and career promotion access for women. More investors are seeing the connection between ESG performance, value creation, and risk reduction. It stands to reason that companies with strong ESG performance tend to be more efficient and less wasteful. They enjoy greater employee commitment and higher productivity; they are more respected and better able to build brand equity. All of that reduces operational and reputational risks.