Since the 1970s, corporate governance has been a measure demanded by regulators to hold business entities and their leadership accountable. At the heart of corporate governance policies are efforts to instill greater ethical and transparent practices that corporations abide by when they operate.

Corporate governance trends have steadily evolved over the years, leading to the enactment and disregardment of specific policies. What remains consistent is a collective effort to maintain responsible governance practices that reflect modern times.

Current corporate governance trends

Some examples of historic corporate governance trends include integrations of governance, risk management, and compliance (GRC) policies to create legal and ethical protocols for businesses. GRC frameworks set benchmarks for responsible business mandates and enable organizations to adapt GRC processes when circumstances require them.

What are some of the top corporate governance trends impacting business entities in 2023 and beyond? Here are some of the most important considerations.

Current Trend #1: More enforceable ESG protocols

Corporate responsibility is a broad term that has taken on numerous meanings over the years. Most recently, corporate responsibility is shaped by an entity’s environmental, social, and governance (ESG) protocols.

A recent study by IBM determined that 70% of workers are attracted to companies with viable ESG programs. Where business was once solely about increasing revenue and driving growth, it’s since evolved into a more complex system. Today, shared social values between owners and employees give responsible business entities chances to recruit top talent to join their ranks.

Current Trend #2: Shareholder use of the universal proxy rule

ESG protocols reflect progressive corporate cultures, but boards of directors face even more pressure to enact responsible corporate governance. The Security and Exchange Commission (SEC) enacted a universal proxy rule to enforce greater transparency at annual corporate shareholder meetings.

Before the enactment of the universal proxy rule, shareholders could send separate proxy cards instead of attending annual meetings that list nominees to the board of directors. The general counsel struggled to organize management and shareholder nominees through multiple proxy cards, limiting transparency and accountability amongst board members.

The universal proxy rule requires all participants to list their nominees on one universal proxy card. The proxy rule is triggered when a member of the board solicits 67% of a company’s shareholders to enact a new nomination procedure. Shareholders can select the nominees they prefer regardless of who nominated them. The universal proxy card organizes nominations in a more structured format, creating diligent minute book records of shareholder meeting minutes.

Current Trend #3: Economic uncertainty impact on GRC strategies

Throughout the year, global inflationary pressures have forced central banks to instigate sharp increases in central interest rates. Rising costs placed added pressure on corporate managers and directors to maintain growth in an increasingly unstable economic climate.

While much of the world is now expected to avoid a painful recession, that doesn’t calm the uncertain waters. Corporate entities must review their risk management protocols and continue adapting to the uncertainty hanging over prospects for growth. Failing to heed risks to effective corporate governance until too late threatens to undermine growth forecasts.

Current Trend #4: Greater C-suite oversight from boards of directors

Income inequality has always been a concern, but it’s rapidly emerged as one of the most trying social issues of our time. In Canada, for example, Canadians are outraged that grocery chain CEOs are making record profits and lucrative bonuses, all the while food prices grow increasingly more expensive with no relief in sight.

Shareholders will hold C-suite leadership to greater scrutiny and accountability regarding key decisions and executive compensation. Greater oversight over corporate management will help enforce responsible governance, ethics, and accountability to limit the risks of public outrage over so-called unfair business practices.

Emerging corporate governance trends

In addition to current emerging trends, corporate entities must prepare for emerging matters that will impact corporate governance in the future. Here’s a quick overview of what issues will influence responsible corporate governance in the future.

Emerging Trend #1: Disruptive nature of AI

Artificial intelligence is impacting how businesses operate at all levels. As ongoing breakthroughs in AI capabilities continue to emerge, businesses must remain vigilant and adapt corporate governance protocols accordingly.

Emerging Trend #2: The role of business ethics

The example of grocery chain CEO compensation against the backdrop of increasingly unaffordable food costs for Canadians is a prime example of an ethically irresponsible practice. Public backlash tarnishes brand reputations, limiting opportunities to boost revenue and grow business. Expect ethics to play an increasingly important role in responsible governance.

Emerging Trend #3: Streamlined reporting structures

Corporate stakeholders must maintain oversight over all business operations. Yet many reporting systems are very outdated and complex, making it difficult to make fast efficient decisions about business policies. Corporations will require modern solutions like entity management software to centralize, consolidate, and streamline entity reporting data.

Emerging Trend #4: Modern talent acquisition strategies

Economic uncertainty won’t last forever, and companies will need to acquire the next wave of talent to foster future growth. Cultivating a corporate culture built around responsible governance, ESG policies, and values-based decision-making will help attract progressive-minded workers to join the ranks.

Use entity management software to support responsible governance

Creating and adapting corporate governance programs helps companies maintain their reputations, reduce risks, and cultivate reasonable growth prospects. Enforcing responsible governance requires a system that organizes and standardizes all GRC and ESG protocols.

Entity management software is one of the best systems for creating structured governance protocols. Entity management software functions as a single source of truth, giving stakeholders clear insight into the current state of the business.

All reporting data is stored within organized minute book templates. Additionally, you can build detailed organizational charts, cap tables, and shareholder ledgers directly within the entity management platform. Use this information to create a governance structure that encompasses current governance trends and allows you to adapt to emerging trends coming down the pipe.

Ready to organize your corporate governance in a more responsible and structured manner? Join the MinuteBox revolution and gather all reporting data into one location. Use that structure and convenience to enact responsible corporate governance across your organization.