A new corporate governance initiative from the powerful New York City Pension Funds (NYC Funds) demonstrates the willingness of pension funds and similar investment groups to influence the board practices of companies in which they invest.
NYC Funds' "Boardroom Accountability Project 2.0" is intended to encourage companies to improve the quality of their corporate governance practices, with particular emphasis on matters of race and gender diversity and climate competence, for the purpose of improving long-term corporate value. The focus of the initiative is the disclosure by each contacted company of a "meaningful board matrix" that sets forth each director's particular skills, experience and attributes as they relate to the long-term strategy and risks of the company, and the director's gender and race.
The goal is to provide investors with a "big picture" perspective on director attributes, and how they contribute to achieving the highest oversight competence level in the boardroom. The NYC Funds' initiative also reflects a strong preference for "robust" director assessment and refreshment practices.
The efforts of the NYC Funds, as well as other pension funds, and asset managers such as BlackRock, Inc. and State Street Corp., is consistent with a larger trend of third parties to affect the governance of companies with which they have significant financial or other control relationships. This is something that hospital and health system governing boards should anticipate.
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