Tag: Caremark
How will AI impact the boardroom?
In this new paper from the Rock Center for Corporate Governance at Stanford, The Artificially Intelligent Boardroom, the authors discuss the potential impact of artificial intelligence on boardroom practices—impact that they believe will be significant, “but perhaps in different ways than is commonly recognized.” While managements and boards have been practically transfixed by the prospective application of AI across the operations of companies, the authors point out that much less attention has been paid to how AI might be applied to “reshape the operations and practices of the board itself, with the prospect of substantially improving corporate governance quality.” The authors expect AI to affect board function, board processing of information, contributions of board advisors and, especially, board/management interaction. The adoption of AI, they advise, “will also raise important questions about how to maintain the line between board and managerial responsibilities, and how expectations on each side will change.” Will AI fuel expectations for board performance? Will it increase the burden on directors to meet those expectations?
Being a “good corporate citizen”: how can ESG be integrated with corporate compliance and board oversight functions?
In light of accelerating concerns about climate change and sustainability, economic inequality, worker safety and racial inequity, companies have faced increasing calls to answer to a variety of stakeholders—stakeholders other than shareholders. These concerns are often collected under the heading of environmental, social and governance issues, sometimes adding in “employees” as a separate “E” category. How should companies that aim to be good corporate citizens identify relevant components of EESG? How does EESG align with existing Caremark compliance efforts? How should we think about incorporating EESG oversight into the board’s organizational structure? Is this another job for the already burdened audit committee? This article, Caremark and ESG, Perfect Together: A Practical Approach to Implementing an Integrated, Efficient, and Effective Caremark and EESG Strategy, co-authored by former Delaware Chief Justice Leo Strine, observes that “boards and management teams are struggling to situate EESG within their existing reporting and committee framework and figure out how to meet the demand for greater accountability to society while not falling short in other areas.” Strine and his co-authors offer a framework for doing just that.
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