Kuala Lumpur, 13 December 2021: The Institute of Corporate Directors Malaysia (ICDM), in partnership with six other Institutes of Directors (IoDs) across ASEAN, today released the 2022 ASEAN Board Trends Report. The report, through the lens of ASEAN directors, provides an overview of the performance of ASEAN companies since Covid-19, and reveals key boardroom priorities and challenges going into 2022. It also serves as a guide for ASEAN boards in their mission to help companies build sustainable growth.
“The release of the inaugural ASEAN Board Trends Report serves as the beginning of a concerted regional effort to elevate director professionalism and board effectiveness in the region. One of the key takeaways from the report findings is that ASEAN boards are aware of the need to do things differently to safeguard organisational resilience and create long-term value as innovation, digitalisation and sustainability are amongst the top boardroom priorities in the coming year. The challenge, however, is the lack of required competencies — both technical and behavioural — on boards to ensure effective oversight on the identified areas. Based on these insights, ICDM and our IoD colleagues in the region will work in tandem to address those gaps,” said Michele Kythe Lim, President & Chief Executive Officer of ICDM.
The release of the 2022 ASEAN Board Trends Report also formally marked the materialisation of the ASEAN IoD Network, which is a regional collaborative network to further elevate corporate governance standards in the ASEAN.
“We believe that there is a tremendous opportunity for the region’s institutes of directors (IoDs) to complement ASEAN’s economic growth as a collective. By pooling our experiences and resources, we can accelerate board and director effectiveness, which would in turn help elevate our markets, ensuring that they are distinguished by competence and quality of governance. Thanks to the shared vision, partnerships and support of our IoD colleagues in the region, the ASEAN IoD Network was able to come into fruition,” said Michele Kythe Lim.
Apart from ICDM, the ASEAN IoD Network comprises the Indonesian Institute for Corporate Directorship (IICD), Myanmar Institute of Directors (MIoD), Institute of Corporate Directors, Philippines (ICDPh), Singapore Institute of Directors (SID), Thai Institute of Directors Association (Thai IoD), and Vietnam Institute of Directors (VIOD).
“Having an ASEAN pool of directors is particularly crucial in helping each ASEAN market increase access to director talent with the necessary knowledge and skills. It is also evident from the report that a well-constituted board remains as a key imperative for board effectiveness, and many ASEAN directors believe that their companies could benefit from a balanced board composition, particularly with multi-generational and independently minded directors,” Lim added.
Some of the key findings and observations from the Report:
- Organisation-wide innovation and digitalisation dominates ASEAN directors’ top boardroom priorities – 54% ASEAN boards see improving business model agility, diversification, transformation and innovation as a key strategic priority to drive success in the medium term.
- Innovation and digital skills remain as a gap in the boardroom – 67% boards believe that more training is needed to improve deliberation around innovation, modernisation and transformation.
- Increased urgency on environmental, social and governance (ESG) considerations into business strategy – 63% ASEAN boards agree that more board developmental and capacity building are needed to drive effective internalisation of ESG principles in their companies and boards plan to increase oversight on this area (43% to assign ESG oversight responsibility to existing board committees, and 33% to set up ESG-specific committees in 2022).
- Board refreshment is ranked first in measures required to improve board effectiveness – ASEAN boards recognise the importance of board refreshment (51%), board evaluations (47%) and continued developmental programmes (46%).
- More opportunities for boards to foster a culture of constructive dissent and encourage diversity of thought – Dysfunctional social dynamics in the boardroom and a sense of complacency are the primary barriers to board refreshment and diversity.
- Growing importance on board independence – Apart from having innovation, digital and ESG competencies on the board, ASEAN directors believe that their companies could benefit from a multi-generational (60%) boardroom with independently minded directors (65%).
“The ASEAN directors’ recognition of the issues in the boardroom and their commitment to driving growth despite the challenging times, as well as expanding responsibilities are promising for the future of the corporate governance landscape. With evolving business risks, stakeholder expectations are expected to intensify – especially in the areas of sustainability and ESG. Boards should thus cultivate a forward-looking mindset and the right organisational culture to turn risks into growth opportunities for long-term sustainability. A paradigm shift to a progressive, sustainability-driven governance model is necessary for companies to further catalyse their overall growth,” added Lim.
For boards to benefit from sustainability-driven governance within their company structure, there are four (4) elements to consider and embody:
- Network-thinking risk mindset – Develop a broader understanding of the growing risks network and approach risks from multi-dimensional viewpoints.
- Agility and digital culture – Cultivate a digital culture that prioritises people and collaboration, helping teams find clarity amidst uncertainties and be equipped to make fast yet effective decisions.
- Stakeholder co-creation – Emphasis on delivering value to stakeholders; stakeholders as active participants in the decision-making process to align organisational purpose and values as well as promote a culture of shared accountability, transparency and integrity.
- Continual innovation – Rethink old certainties, keep an open mind for unknown possibilities and inculcate a culture of experimentation.
The Report is based on a total of 114 comprehensive responses across Malaysia, Vietnam, Singapore, Thailand, Indonesia, Myanmar and the Philippines, covering senior leaders including Board Chairs, Board Committee Chairs, Non-Executive Directors, Executive Directors and Chief Executive Officers/Presidents.
Greater Capacity Building Efforts for Corporate Directors
In conjunction with the release of the 2022 ASEAN Board Trends Survey, ICDM also announced that they will be launching the ICDM Director Certification Programme in 2022, which is a formalised qualification programme designed to build capacity across the three key stages of directorship: (1) aspiring and new, (2) intermediate and (3) experienced directors. Developing ESG-competent boards and directors will be a key priority of ICDM in the coming years. In support of this important agenda, the ESG module will be made compulsory in the Certification Programme. Elective modules will also be offered covering related board committees and trending areas such as technology, stakeholder capitalism, talent management, cybersecurity, reputation and crisis management.
For more information, please visit www.icdm.com.my.