Institutional EYE

Commentary on Corporate Governance Issues

Five trends that will shape the governance landscape in the 2020’s

Discussions on corporate governance that were met with roll of eyes at the start of the decade, now dominate media headlines. While a lot can – and will change in the next ten years, some trends that that will play out and how the governance landscape might change, are discussed below. Shift in focus from G to ESG: Over the past few years boards and investors have woken up to why governance matters. They have realized that they ignore governance at their own peril. During the coming decade, they will be expected to change gear and focus on Environment, Social and Governance (ESG) issues. Auditors, rating agencies and big data: Access to data and public records is changing at an unprecedented

2019 challenged India’s corporate governance practices

Companies with institutionalized governance practices were better able to withstand the onslaught of 2019. Both equity and debt markets were affected by governance practices in 2019, which is expected to renew focus on responsible investing going forward. For Corporate India, the past 12 to 18 months have been difficult. With economic growth slowing, achieving business targets has been stretching managements with a few opting for short-term fixes. The meltdown of two large non-banking finance companies (NBFCs) impacted the flow of funds. With stretched liquidity and a weakened real estate sector, the asset quality of several NBFCs came under scrutiny. One large NBFC was referred to Insolvenc

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