Corporate Governance In Finance

I am delighted to be able to share this new paper, co-authored with a number of leading academics and practitioners from across Europe, addressing corporate governance from a modern stakeholder perspective. It highlights the growing interdependency between corporations and communities - and the rising tide of expectations from politicians, customers, and employees - in the debate about how organisations should govern in this complex environment. We put forward a structured set of practical perspectives on how boards can reshape their strategies to integrate sustainability into core operations, actively contributing positively towards shared global challenges. As the paper notes, "The governance model we propose operates on the premise of an interconnection between corporations and society, acknowledging their mutual dependency and the distinct roles they play. By embracing this reciprocal relationship, we can foster a governance framework that enables corporations to fulfil their responsibilities while generating value that goes beyond financial metrics." Rodolphe Durand Bruno Deffains Xavier Dieux Laurence Dors Dr. Martin Fischer Daniel Hurstel Jukka Mähönen Renate E. Meyer Anne-Christin Mittwoch Guido Palazzo Markus Scholz Beate Sjåfjell Jaap Winter Saïd Business School, University of Oxford Oxford University Centre for Corporate Reputation #purpose #stakeholderengagement #governance https://lnkd.in/e5QXrcw3

𝙀𝙪𝙧𝙤𝙥𝙚 𝙖𝙩 𝙩𝙝𝙚 𝘾𝙧𝙤𝙨𝙨𝙧𝙤𝙖𝙙𝙨: 𝙁𝙞𝙣𝙖𝙣𝙘𝙞𝙣𝙜 𝙩𝙝𝙚 𝙁𝙪𝙩𝙪𝙧𝙚—𝙤𝙧 𝘽𝙖𝙣𝙠𝙞𝙣𝙜 𝙤𝙣 𝙋𝙧𝙞𝙫𝙖𝙩𝙞𝙯𝙖𝙩𝙞𝙤𝙣? Daniela Gabor argues in The Financial Times that the EU’s Savings & Investment Union (SIU), designed to close innovation, decarbonisation, and security gaps, risks quietly exporting the Americanised, finance-first model (👉 https://lnkd.in/eFK4-Fpw). Completely agree. 🔘 €750 – 800 bn/year by 2030 is the marked price for Europe’s transformation, per Draghi’s diagnosis. 🔘 Pitched as a "win‑win": American-style capital markets could convert €8 tn in bank deposits into investment fuel... but this assumes dismantling Europe’s state‑based pensions. 🔘 In the US, pension assets are ~130% of GDP; in most EU countries they lag below 20%. That societal buffer changes everything. 🔍 Gabor warns that pushing savers into private markets risks eroding the social contract, shifting assets like housing or hospitals into private equity portfolios. Yield-driven and detached from public welfare. 🧩 And here’s the deeper issue: technocratic solutions to social challenges often amplify democratic deficits. By treating pension reforms and welfare shifts as mere "financial engineering," we sideline public debate on what kind of society we want. ✅ The policy impulse may be well-intentioned. But democracy demands transparency. Is Europe ready to openly debate: 💰 Who bears the risk—and reaps the reward? 🏥 Which public services stay public? 🤝 What should the social contract look like in 2030?

"💡 What is internal audit? Internal audit is an organizational function that evaluates the adequacy and effectiveness of a company’s risk management, control, and governance processes. It is organizationally independent from senior management and reports directly to the board of directors. 🏛️ The role of internal audit in corporate governance In the Three Lines Model, which is a popular risk governance framework (https://lnkd.in/e8dWA8_D), internal audit serves as the third line and is responsible for providing independent assurance to the board of directors. But internal audit is not the only assurance provider. In many companies, the board also gets reports from compliance, external auditors, etc. To avoid blind spots and “assurance fatigue”, the different assurance activities need to be coordinated (e.g. by using the same terms, taxonomies, and threat models). Internal audit is often responsible for ensuring this coordination. ✅ Why frontier AI developers need an internal audit function Internal audit can identify ineffective or inadequate risk management practices. This is important because, without a deliberate attempt to identify flawed practices, some of them will likely remain unnoticed. For example, developers' model evaluations might be inaccurate or unreliable (see https://lnkd.in/embgeirH) or their information security might be inadequate (see https://lnkd.in/d9MTCgKx). Internal audit can also ensure that the board has a more accurate understanding of the current level of risk and the adequacy of risk management practices. For example, internal audit could verify if the company actually complies with its AI safety framework (see https://lnkd.in/e2ZnMyYT). ❌ Limitations But frontier AI developers should also be aware of key limitations: Internal audit adds friction, it can be captured by senior management, and the benefits depend on the ability of individuals to identify ineffective practices. In light of rapid progress in AI research and development, frontier AI developers need to strengthen their risk governance. Instead of reinventing the wheel, they should follow existing best practices. Although this might not be sufficient, they should not skip this obvious first step." Paper (and summary) are from Jonas Schuett and the Centre for the Governance of AI (GovAI).

Biodiversity Reporting 🌍 Recent initiatives in corporate sustainability have brought significant advancements towards more standardized and transparent biodiversity reporting. These efforts align with target 15 of the Kunming-Montreal Framework, aiming to improve the clarity and accountability of corporate environmental impacts. The introduction of the EU Sustainability Reporting Standards 4 (ESRS 4) under the Corporate Sustainability Reporting Directive (CSRD) marks a critical development in this area. This directive requires companies in Europe to provide detailed reports on their biodiversity and ecosystem impacts. Moreover, businesses must outline their strategies for reducing these impacts, including setting clear biodiversity targets and metrics to track progress. In addition to EU regulations, the Taskforce on Nature-Related Financial Disclosures (TNFD) is creating a framework to assist companies and financial institutions in reporting their environmental footprints. At a recent summit in Davos, TNFD announced its first group of over 300 organizations that have committed to adopting TNFD Recommendations for nature-related financial disclosures. Simultaneously, the International Sustainability Standards Board (ISSB) is making strides with its “General Sustainability-related Disclosures Standard" (S1), unveiled at COP 15. This standard is designed to integrate considerations of natural ecosystems into corporate reporting, encouraging a holistic approach to sustainability. As these new standards and directives are implemented, they are set to redefine how companies approach environmental responsibility and reporting. These changes are not just regulatory—they are strategic business imperatives that are crucial for maintaining corporate integrity and securing long-term sustainability. Source: South Pole #sustainability #sustainable #business #esg #climatechange #climateaction #sdgs #biodiversity #nature #reporting

These are the sort of changes that if followed through could *start* to unlock the supply of great UK productive real assets for pension funds to invest in, with benefits for growth, communities AND pension fund members. How to get the most impact in productive assets: 1. Scope - energy, transport and living infrastructure are growth multipliers hiding in plain sight. Broaden out the currently narrow obsession with VC and capital will come. 2. Financial merits. UK assets still need to stand up on financial merits vs the alternatives, and not every project will work for asset owners. But there’s a lot of practical benefit to UK allocations not least that they are usually less costly and better value for money to access. 3. Capability build (1) - pension fund industry has been fragmented and punches below weight, standard answer of pooled funds isn’t the whole answer. Needs vehicles that can support co-investments in big projects, can own assets direct. 4. Capability build (2) pension funds need resources to evaluate deals and co-ordinate co-investments, in order to get best value for money out of investments. A hybrid of the Australian / Canadian models. Would love to see asset owner collaboration here rather than all building separately. 5. Partnerships. Not realistic for UK pension funds to in-house all aspects at this stage. Forming the right partnerships with managers to achieve a hybrid model enabling deployment at scale + low cost is vital. Alignment and capability key. I don’t think a problem has been lack of capital, it’s all the bottlenecks in the system have made it hard to deploy assets, making the default move of UK pension funds to go global for infrastructure and even real estate investments (understandably). Could change. https://lnkd.in/d4Vm5_5J

Behind the Books ..... When Audit Committees Blink How governance bodies failed India's biggest corporate gatekeeping tests The Audit Committee is not just a financial compliance panel, but a fiduciary body that safeguards shareholders, ensures corporate transparency, and plays a vital role in risk governance. With growing corporate frauds and governance issues in India, audit committees must act proactively, independently, and diligently. ❓ Points to Ponder # Are Audit Committees truly independent, or just boardroom formalities? # What mechanisms ensure disclosure of conflicts of interest in RPTs? # Why do audit committees repeatedly miss financial red flags, incompetence or complicity? # How can SEBI and RBI enforce stricter audit accountability for listed firms? # Should audit failures be criminally prosecutable in India under company law or financial crime statutes? Closing Thoughts💭 In a time when balance sheets can be doctored with a keystroke, the true balance lies not in the numbers but in the courage of the committee that questions them. Sources: Economic Times, Business Standard, Reuters, Bloomberg, Mint, Financial Express, Moneycontrol, The Hindu BusinessLine, CNBC-TV18, and Livemint. #CorporateGovernance #AuditCommittees #EthicsMatters #LessonsLearned

Most startups don’t fail because of competition. They fail because the foundation was never set right. That’s the insight I couldn’t shake after recording the first episode of my new podcast, Backstage with Builders. It’s a series where I talk to the people building real businesses in tech. Founders. Operators. Decision-makers in SaaS, IT, and fintech. No top production. Nothing too crazy. Just what really happens behind the scenes. My first guest? Pratheesh Chambeth. AI entrepreneur. Software builder. Founder of Capisso - an AI tool that automates bookkeeping. He created 350+ tech jobs. Working between Kerala, Ireland, and Spain. And he said something that stuck: "The majority of startup founders I’ve encountered fail before reaching the legal stage." Let that sink in. But legal is very important, according to him. And he explains why getting the foundation right is non-negotiable. Legal isn’t something you fix later. It’s something you build on from the start. And before you get confused, here's what the right legal foundation looks like in India: 1// Choose the right structure Private Limited or LLP? Register with MCA. Get your DIN and DSC. Don’t overthink - just start with the right base. 2// Protect your IP early Your logo. Your software. Your brand. Protect it with trademarks and copyrights. And yes - use NDAs when needed. 3// Stay compliant from Day 1 GST registration. IT Act compliance. DPDP readiness. You can’t grow if the ground beneath you is shaky. 4// Get the right agreements in place Founders’ agreement. Shareholder terms. Employee contracts. Don’t leave roles, equity, or ownership to chance. 5// Keep your docs in order Digital storage. RoC filings. Contract backups. What you can’t track, you can’t protect. Startups that take legal seriously: • Survive longer • Scale better • Partner faster • Raise smarter Thanks again to Pratheesh Chambeth for dropping that gem. If you’re building a company and want the full conversation - it’s in the comments. More episodes soon. More lessons behind the scenes. --- ✍ Tell me below: What’s one legal mistake you wish someone had warned you about earlier?

On Monday European Commission adopted the European Sustainability Reporting Standards (ESRS) for use by all companies subject to the Corporate Sustainability Reporting Directive (CSRD). This marks another step forward in the transition to a sustainable EU economy. Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said: “The standards we have adopted today are ambitious and are an important tool underpinning the EU’s sustainable finance agenda. They strike the right balance between limiting the burden on reporting companies while at the same time enabling companies to show the efforts they are making to meet the #greendeal agenda, and accordingly have access to #sustainable finance.” The standards cover the full range of environmental, social, and governance issues, including #climatechange, #biodiversity and #humanrights. They provide information for investors to understand the sustainability impact of the companies in which they invest. They also take account of discussions with the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI) in order to ensure a very high degree of interoperability between EU and global standards and to prevent unnecessary double reporting by companies.

🚀 Scaleup Europe Fund (#SEF): Why It's Different, Why It's a Turning Point, and Why We're Doing It This new growth-stage private equity fund will deploy investments on the order of €100 million each, with an initial capacity for around 50 deals, kicking off in Q2 2026. The European Commission is joining as one of the founding investors, alongside top-tier private players, all on equal term 🤷 Why Is It Different? Unlike traditional EU funds, #SEF isn't implemented by the Commission or the European Investment Bank (EIB). Instead, it's by a prestigious, experienced private fund manager – to be selected jointly by the private investors and the Commission. This equal partnership ensures market-driven decisions, and professional fast execution. 🤷♂️ Why Is It a Turning Point? #SEF isn't about co-investing with existing VC funds or just pooling public money. It's laser-focused on unlocking institutional investors like foundations, family offices, and pension funds – the heavy hitters managing trillions in Europe. Everyone knows: If these investors commit just 1% of their assets under management to VC, we'd match U.S. levels overnight. Sure, 50 investments at €100M each won't fix everything overnight, but it's the icebreaker. It catalyzes a cultural shift, proving scaleup investing is a smart, high-return asset class. 🤷♀️ What It Doesn't Do... Yet #SEF ramps up the supply of innovation funding for startups – that's huge. But it doesn't yet tackle the demand side: getting EU industry to buy from and partner with these innovators. Why "yet"? The next iteration could change that. We're eyeing contributions from industry via the upcoming European Corporate Network (#ECN), as outlined in the EU Startups and Scaleups Strategy. Imagine corporates stepping up as "venture clients" – sourcing solutions from EU scaleups to keep talent and value creation here. 🤷 Why Are We Doing It? The Big Policy Win T#EUTechSovereignty, plain and simple. Founders keep telling us: When a non-EU lead investor comes knocking for those massive late-stage rounds, they're often pushed to relocate. Many would love a strong European lead to stay put and build here. #SEF delivers that: The "right to stay" for #EUstartups that want it. Of course, if customers are elsewhere, relocation might still happen. unless we ignite EU industry to collaborate via the venture client model (the demand side of innovation). This fund isn't just money; it's a statement: Choose Europe to start and scale. All details straight from the official EU press release: https://lnkd.in/eKfvW62N #ScaleupEurope #DeepTech #EUStartups #VentureCapital #InnovationEurope

Big Law's largest clients keep rejecting *anti-DEI board proposals in 2025. Nearly every *anti-DEI shareholder proposal at Fortune 100 companies this year, from Amazon to Apple, Netflix to Walmart, was rejected by 97% to 99% of investors. Some didn’t even clear 1% support. Nancy Levine Stearns has noted that shareholders at 30 of the world’s largest corporations, worth a combined $13 trillion, went 30–0 in defeating anti-DEI proposals this year. CEOs continue to call diversity a business imperative. I almost didn’t believe those numbers. That’s how powerful the Big Law echo chamber around the DEI retreat has been. So I pulled the proxy statements and vote tallies myself. I went company by company. And the support is real. Meanwhile, many law firms are quietly dismantling their diversity efforts and support for diverse attorneys, only to see some key clients walk away as a result. Why the disconnect? My working theory (I want to hear other takes too!): Corporations are much more accountable to consumers, employees, and public opinion, forces that clearly still value diversity. Law firms are facing a different kind of pressure. Regulatory threats from the federal government. Political scrutiny. Risk to federal contracts. That pressure may be shaping behavior a bit more than client values. If the legal industry feels off right now, you’re not imagining it. But ZOOM OUT. The vast majority of stakeholders, including clients, shareholders, and future talent, still want progress! They still want to see courage and that these firms stand for something. Thank you, Nancy, for your continued coverage of these corporate actions. They continue to give us some hope this year. Highly recommend everyone follow along.