The National Association of Corporate Directors (NACD), the authority on boardroom practices representing more than 23,000 board members recently released CEO Activism: What’s the Board’s Role? to guide directors and management in establishing the board’s role and level of involvement in addressing social and political issues.
This publication is built upon guidance related to corporate social and political speech provided in the recently released NACD report, The Future of the American Board: A Framework for Governing into the Future, now fully available to the public online.
NACD is further exploring the board’s role in the new territory of CEO activism in this publication.
“Boards must engage with management to determine the growing challenge of when the company takes a position on sensitive political and social issues,” said NACD president and CEO Peter Gleason. “Tipping-point events over the last three years have sparked stakeholders’ calls for companies to use their position to effect societal change; however, company boards and management must work together to reach decisions on whether to act or not to act on these stakeholder demands with purpose and clarity.”
The publication offers an overview of the rise of CEO activism and board oversight, taking a proactive approach, and offers guidance on questions that management and the board should work together to answer, such as these:
- How does the issue directly impact the company’s business?
- Is the issue related to the company’s values as understood by employees?
- Is the issue important to the company’s other stakeholders (e.g., shareholders, customers, suppliers, and others)?
- Are the company’s actions consistent with the messaging?
- Is the company prepared for any backlash or unintended consequences?
Read the report and more about the Future of the American Board here.
About the Future of the American Board Commission
In January 2022, NACD established The Future of the American Board Commission, comprising 19 leaders in governance, including leading directors, investors, academics, CEOs, and former regulators, to develop a set of guiding principles for boards to help them govern into a more turbulent future.
The goal of the initiative is to help boards evolve to meet the demands of a more demanding, inclusive, and turbulent future. The Commission developed principles within The Future of the American Board report to guide American directors and corporations into the future, and will continue their mission with updates from the initiative’s partner-led working groups in 2023. Partners leading these working groups include KPMG (audit committee), Marsh McLennan (risk committee), Pearl Meyer (compensation committee), and Korn Ferry (nominating and governance committee).
Learn more on The Future of the American Board website and download The Future of the American Board: A Framework for Governing into the Future: Executive Summary or the full report here.
The National Association of Corporate Directors (NACD) is the premier membership organization for board directors who want to expand their knowledge, grow their network, and maximize their potential.
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