Policy shifts have been coming at an unprecedented pace.
Global warming started to emerge as an issue as far back as the 1970s, and it took a long time to be included in government policy, financial planning and textbooks.
But more recently, China has unveiled a new Environmental Protection law, and the US Department of Labor has listed human rights, governance and environmental protection as factors for pension funds to take into account in investment decisions.
And Britain has passed the Modern Slavery Act to ensure that slavery and human trafficking do not occur in supply chains.
Quick policy shifts have undoubtedly posed new challenges for businesses, as well as enormous opportunities for new companies.
With the rise of mobile communication technology and social media platforms, events create a ripple effect well beyond their immediate impact.
In the past, incidents that occurred far away took a long time to get reported in newspapers.
Now, news of any major incident will be disseminated worldwide within less than an hour.
For example, word of the Umbrella movement in Hong Kong and the Paris terrorist attacks spread all over the world immediately.
And news like this can exert a huge impact on the political and business world.
However, most companies usually react with suspicion to any interventions from investors.
Some even resent what they feel are attempts at supervising them by outsiders who lack inside information.
If investors propose a meeting with board members, some company executives will find themselves ill-prepared to cope with the request.
Multinational corporations have plenty of resources to prepare presentations or conversations with investors or even arrange media training for board members.
By contrast, smaller firms have limited resources or professional talent to make such arrangements.
Sometimes, companies dismiss such requests from investors as nonsense.
But times change, and we are in a new era.
Companies need to be transparent and act in a fair and responsible way, so as to sustain their growth and receive public recognition.
That means companies have to establish a new governance system that includes powerful oversight and balances, clear reporting and performance measurements.
I’ve had discussions with several board members of Hong Kong-listed companies recently.
One topic is the annual general meeting. Well-managed companies consider the AGM as the conclusion of a certain period and the start of planning for the next stage.
The results of voting by shareholders will be analyzed carefully, and senior company executives will discuss with shareholders why they oppose certain decisions, so as to find out the real reasons.
We are happy to support those board members who are open to external opposition and those who are willing to communicate with investors to prove their capability and commitment.
The AGM should not be regarded as a routine chore.
Instead, companies should take the opportunity to communicate with investors and find ways to improve in the future.
It’s similar to a tango between investors and listed companies, and both sides should communicate adequately with each other.
This article appeared in the Hong Kong Economic Journal on Jan. 26.
Translation by Julie Zhu
[Chinese version 中文版]
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