‘The Crisis Will Bring Changes in Company Management’

The crisis caused by the coronavirus will change the business strategies of companies worldwide, primarily in decision-making processes, changes in work organization, and placing greater importance on long-term planning of sustainable business goals with preparation for resilience and stability of companies in various stress scenarios. 

These are some of the conclusions from the 25th European Conference on Corporate Governance, held on June 18, 2020, under the auspices of the Croatian Presidency of the Council of the European Union. Although virtual, the conference brought together a number of prominent experts in corporate governance, representatives of companies, state institutions, and the academic community, as well as high officials who discussed the future of corporate governance in the post-COVID-19 world. This year’s conference particularly examined the role of sustainability, business planning, and investments in corporate governance during times of crisis.

The conference, organized by the Croatian Financial Services Supervisory Agency (HANFA), the Independent Directors Association, and EY, with the support of partners: the Association of Chartered Certified Accountants (ACCA), AccountancyEurope, EcoDa, EuropeanIssuers, and BusinessEurope, was attended by over 600 participants from across Europe and the world.

Addressing the participants at the beginning of the conference, the Minister of Justice of the Republic of Croatia, Dražen Bošnjaković, emphasized that quality corporate governance contributes to the long-term success of companies by ensuring transparency in operations, the effectiveness of business control systems, and the efficiency of accountability systems of companies. He stressed that high standards of corporate governance should be the foundation not only for companies and their stakeholders but also for the market competitiveness of society as a whole.

European Commissioner for Justice Didier Reynders stated that the European Commission has proposed a unified Recovery Plan in response to the current COVID-19 crisis, as well as the challenges we face for generations – sustainability and digital transformation. He highlighted that this crisis has shown how important it is for companies to take into account the interests of stakeholders and to have adequate processes in place to identify and address impacts on people, the planet, and society.

In her announcement of the panel discussions, EY’s main partner for the EMEIA region, Julie Teigland, noted that COVID-19 has influenced changes in business, people, and society, particularly highlighting three changes – increased digitalization that ultimately helped companies enhance their resilience during the crisis, commitment to purpose and giving back to the community, and an increased focus on sustainability, especially climate change.

During the panel discussion “Management in Times of Crisis: Key Factors in Building Resilience,” the roles and responsibilities of management boards and supervisory boards were discussed, as well as the importance of quick decision-making, especially in times of crisis. In this context, fast, transparent, and continuous communication with all stakeholders is a very important factor and one of the stability factors of the system. Therefore, HANFA called on securities issuers back in March to publish all relevant information about the impact of COVID-19 on their business indicators and processes, which they promptly did and continue to update regularly.

“In times of crisis, it is not easy for company management to focus on long-term goals due to the problems they must solve in the short term, but it is important to maintain a balance between short-term and long-term goals and to think strategically about what human and capital resources will be needed after the crisis,” emphasized Ante Žigman, the Chairman of the Management Board of HANFA, on that occasion.

On that occasion, there was also talk about changes in business ethics, relationships with employees, and changes in business models due to the pandemic. Accelerated digitalization and the way technology is used have had a significant impact on business, but it is also important to consider the protection of systems and the security of the technology we use.

However, in addition to the response during the crisis, continuous cooperation between regulators and supervised entities, regular stress testing, and good preparation for times of crisis are important. During the all-day panel discussions, participants discussed the role of corporate governance in Europe’s recovery process, the importance of boards in building resilience during crises, future trends in corporate governance in the European Union, re-evaluating corporate governance in the age of digital transformation and COVID-19, as well as capital markets and responsible investment, from the perspectives of companies, the academic community, regulators, state institutions, and other bodies.

An important message from the conference is that the role of corporate governance during a crisis is particularly important, and that a crisis can be an opportunity for positive systemic changes. As highlighted in the closing speech by Ruchi Bhowmik, EY’s Global Vice President for Public Policy, we can expect a reorientation of companies towards creating long-term value for all stakeholders, with an increasing focus from leaders in both the private and public sectors on sustainable development. The challenges brought by the pandemic, from changes in work organization to the adaptation of supply chains, are testing the resilience of companies and governments worldwide, but at the same time can serve as an impetus for re-evaluating strategies, for better long-term planning in the future, and for creating sustainable businesses, ecosystems, and communities around the world.

—

—

{embed_digitalno_izdanje}{/embed_digitalno_izdanje}