Financial 29 Aug 2019

Compliance and clarity: Communications and corporate governance

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We live in an era of hyper-transparency, a key feature of a time in which “there is no way to escape, no place you can hide,” as stated by Andrea Bonime-Blanc, founder of the company GEC Risk Advisory. Organizations must accept that they cannot hide or remain silent, and especially not be passive objects of conversation.

Control of Power

A company’s corporate governance encompasses the following areas:

  • The decision-making process related to the company’s general strategic direction and corporate policies, including investments, mergers & acquisitions, executive appointments and succession planning.
  • The mechanisms that guarantee executive management’s proper performance and approved strategic plan’s implementation.
  • The establishment of appropriate policies and procedures to ensure the company and its managers, as well as its employees and involved third parties, comply with the relevant regulatory framework.
  • The communication channels between the company’s main governing bodies, as well as the execution of their rights and duties, including the management board, board of directors and shareholders.

From financial to integrated report

One of the keys to good corporate governance is keeping stakeholders informed of all events that may impact the operation and, above all, the progression of the results. This obligation to be transparent is mentioned in general terms in communication policies, frequently appearing in regular reports and, specifically, road shows.

The International Integrated Reporting Council (IIRC) is a global coalition of the regulators, investors, businesses, standard makers, accountants and NGOs who promotes an evolution in corporate reports based on a new way of communicating.

From reporting to dialogue

The governance of an organization requires constant communications in many, if not all, of its areas. In some cases, it is a matter of reporting both financial and nonfinancial results. In addition to reporting, communication is essential to keeping decision-making bodies connected with stakeholders.

Information technologies have been making these conversations increasingly personal and individual, so the concept of a “stakeholder” has become obsolete due to its inaccuracy. Thinking and acting as if all customers want to have the same type of relationship with the brand is as well. Today’s communication tends are more individual than collective, though collective communication still influences conversations—particularly through social media, where it can still affect individuals.

Either comply or explain

The main tenet of the Spanish National Securities Market Commission’s (CNMV’s) Code of Good Governance, which is based on reference documents in the field of corporate governance, is that a company must “either comply or explain.” Compliance must not only be to regulations, but also to the rules dictating good practices, which the regulatory agency understands must be incorporated into companies.

“Explanation” focuses on noncompliance with these good practices, such as failing to report or break down remuneration to the members of the management board and executive team. Another recent example of “explanation” is in gender equality policies, referring to the percentage of women in the workforce and, above all, in the management and administrative bodies.

G20/OECD six principles for corporate governance

    1. Effective corporate governance framework
    2. The rights and equitable treatment
    3. Institutional investors, stock markets and other intermediaries
    4. The stakeholders’ role in corporate governance
    5. Data disclosure and transparency
    6. Management board responsibilities
José Manuel Velasco
Executive Communication Coaching
He is part of the Advisory Board at LLYC and represents the Executive Communications Coaching leader at the firm. He is Chair of the Global Alliance for Public Relations and Communication Management, a coalition that brings together professional communication associations and academic entities from around the world. He has worked as General Manager of Communications and Corporate Responsibility at the construction company FCC and as Director of Communications at the energy company Unión Fenosa and the railway company Renfe. In addition, he has presided over the Spanish Association of Directors of Communications (Dircom) and the Ethical Management Forum (Forética). He holds a degree in journalism from Madrid's Complutense University and completed the Advanced Management Program offered by the Institute for Management Development (IMD) in Lausanne, Switzerland. He is a certified executive and team coach by the International Coach Federation (ICF). 
Paulo Nassar
President of the Brazilian Association of Business Communication (Aberje)
Paulo is also the coordinator of the Research Group on New Narratives (GENN ECA-USP) and a professor of the University of Sao Paulo School of Communications and Arts (ECA-USP).He also serves as a member of the Higher Council for Advanced Studies (CONSEA), the Abrinq Foundation and the Padre Anchieta Foundation. In the last 10 years, he has published various essays and opinion articles in the most popular Brazilian newspapers, including Folha de São Paulo, Correio Braziliense and O Globo, among others.He holds a master's and Ph.D. from ECA-USP and a postdoctoral degree from Libera Università di Lingue e Comunicazione a Milano (IULM) in Italy.
Jorge López Zafra
Senior Director of the Corporate & Financial Communications area
Lopez Zafra has more than 20 years of experience in the Communications sector. He is an expert in strategic planning, financial communications and competitive intelligence (the analysis of sectors and trends). He joined LLYC October 2016 after a period spent actively collaborating with the company. Previously, he worked for Iberdrola for eight years, where he helped develop strategies and coordinate communication projects (OPS, M&A, General Shareholders' Meetings and other corporate matters). In addition, he held a variety of positions in the company, including head of strategic communications, digital communications and brand intelligence and reputation. Lopez Zafra also worked for Hispania Service and Airtel.

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