JEDDAH — The GCC Board Directors Institute (GCC BDI), in its sixth annual Board Effectiveness Review survey, said that 60 percent of the surveyed have cited board composition and director capabilities as barriers to improving board effectiveness in the GCC region.
The findings indicate that companies are still struggling with the implementation of new regulations and codes of corporate governance, and need more time to introduce new practices to the boardroom. The report also shows varied levels of board and corporate governance maturity across the GCC region, with banks and listed companies among the early adopters, driven by greater regulation.
While family businesses generally lag, leading family and private firms as well as government-owned organizations make noticeable efforts to achieve good governance. The regional business landscape is changing, and there is no doubt that board effectiveness and good governance are the foundations of successful transformation.
Jane Valls, Executive Director of GCC BDI, said: “At GCC BDI, we continue to support boards, directors and board secretaries in the region with professional development, induction, board evaluations, research and information sharing, in addition to assisting them with board work and board projects. Our new certification programs for board directors and board secretaries are proving very popular, and are a good sign that the GCC region is developing a professional pool of board directors and board secretaries for the future.”
Board effectiveness and corporate governance in the GCC region have witnessed considerable advancements, especially in the past three years, however, recent corporate failures are constant reminders that there is still work to be done. The report indicates that regulators need to continue to increase their oversight and actively encourage boards to embed good governance in corporate culture. Otherwise they risk a low level of adoption of the fundamental principles.
The GCC BDI is a not-for-profit organization that helps board directors acquire the expertise and tools for effective governance.
The survey polled 105 board members with the aim of monitoring the improvements made over the past two years since the publication of the last Board Effectiveness Review in 2017, as well as over the past 12 years since GCC BDI started conducting surveys of boards in the region. The report highlighted the changing perceptions of corporate governance in the GCC region, the need for directors to spend more time on board duties, the lack of diversity on boards in the region, as well as the growing importance of the role of the board secretary. In addition, it maps new and emerging trends that GCC boards will need to address in the future, such as integrated reporting, and environmental, social and governance (ESG) reporting and auditing.
Sixty percent of the survey respondents came from countries of the GCC region, with a strong participation from Saudi Arabian nationals at 30 percent, followed by UAE and Bahrain nationals at 10 percent each. The low rate of response from female board members reflects the current situation in the region. Recent research estimates that women’s board participation remains low at approximately two percent. Forty-five percent of the respondents believe that the lack of qualified candidates is an obstacle when it comes to appointing women to boards.
GCC BDI is a not-for-profit organization that helps board directors acquire the expertise and tools for effective governance, has announced the results of its annual Board Effectiveness Review survey. The sixth edition of the report builds upon earlier research work done by GCC BDI and examines the advancement of board effectiveness in the region. — SG
