2019 Russell Reynolds Associates Study – CSR, Digitalization, Diversity: Analyzing the Major Governance Trends in 2019

October 1, 2019 – The arrival of the PACTE law in France has ushered in a new era of corporate governance, motivating leading companies to place strategic importance on the issues of corporate social responsibility, digitalization and diversity, a new report from Russell Reynolds Associates has found.

The study, now in its ninth year, looks at the major governance trends in CAC 40 and SBF 120 companies.

It reveals several trends:

The CSR dimension—corporate social responsibility—is increasingly present within companies; more than half of CAC 40 companies now have a CSR committee

Boards have diversified, ensuring gender ratios are in accordance with the Copé-Zimmermann law and digital skills are reinforced

Board composition has evolved toward being leaner and more efficient

CEOs have seen a rapid increase in turnover: A quarter of them have held their position for less than two years

An impressive increase in power of CSR within the CAC 40 committees

In line with the implementation of the PACTE law—Action Plan for Business Growth and Transformation—passed in May 2019, the boards of CAC 40 companies have a greater awareness of the strategic importance of CSR, which is now perceived as a key priority.

This trend, already evident in 2018, is confirmed by the doubling of the number of CAC 40 companies with a CSR committee over the past two years.

Simultaneously, leading businesses are increasingly looking to explore and define their “purpose.” “The CAC 40 boards are aware of shareholders’ and civil society’s growing expectations. Companies are expected to adopt more responsible and socially beneficial strategies, instilled with meaning and purpose, following the examples of Carrefour and Atos, which introduced their purpose in their articles of association,” says Marc Sanglé-Ferrière.

More lean, active and efficient boards

The CAC 40 boards are meeting more frequently, with an average of nine to 10 meetings per year (one more than those of the SBF 120 outside of the CAC 40). This can be explained by the acceleration of the transformation in companies and by the increased complexity of risk management, among other things.

This goes hand in hand with downsizing, with an objective to become more efficient: The average number of board members went from 13.95 to 13.6 in two years, trending toward the ratio of SBF 120 boards, which have on average 12 board members. Almost half of SBF 120 companies have carried out an independent board evaluation in the last three years.

A progressively digital and diverse board composition

Digital transformation remains a key preoccupation for leading businesses. Thus, the analysis of board composition reveals a constant rise in the number of board members with digital skills and expertise, representing an almost twofold increase between 2017 and 2019. This translates into a rise in board members with digital expertise from 0.7 to 1.25 within CAC 40 boards. The ratio of “digital” board members is 9 percent for the CAC 40 (as opposed to 4.8 percent for the SBF 120 outside of the CAC 40).

“Board members with digital skills are increasingly present. Leading companies have realized that it is essential to have this profile on boards in order to accelerate their transformation. This number will continue to grow in the years to come,” says Paul Jaeger.

As a result of the Copé-Zimmermann law, the gender parity objective has been reached by all the SBF 120 companies, except those operating under foreign jurisdiction.

Women represent 46 percent of all board members in 2019, more than 10 percentage points higher, an increase of 29% from 2015.

These results place France among the leaders in gender parity globally (46 percent in France, 35 percent in Italy and 24 percent in Spain). However, women represent only 5 percent of chairpersons in the SBF 120.

Although there is only one female CEO in the CAC 40, for the SBF 120, the proportion of women CEOs has progressed during the last three years from 7 percent in 2017 to the current 11.25 percent.

Women have mostly functional responsibilities: Only 35 percent occupy operational positions within SBF 120 executive committees, although this number has been constantly growing (24 percent in 2018).

Higher CEO turnover during the last two years

Within the SBF 120, CEOs have held their position for an average of approximately nine years. During the last couple of years, the study notes a strong tendency toward renewal: One-quarter of CEOs have held their position for less than two years, resulting in a younger and more international CAC 40 typical profile.

The average age of CEOs between 2018 and 2019 decreased from 58 to 57 years in the CAC 40 and from 57 to 55 years in the SBF 120 outside of the CAC 40. With regard to internationalization, currently 15 percent of CAC 40 CEOs are foreign compared to 13 percent in 2018.

About Russell Reynolds Associates:

Russell Reynolds Associates is a global leadership advisory and search firm, which has operated in Paris since 1978. Our 450+ consultants in 46 offices work with public, private and nonprofit organizations across all industries and regions. We help our clients build teams of transformational leaders who can meet today’s challenges and anticipate the digital, economic and political trends that are reshaping the global business environment. From helping boards with their structure, culture and effectiveness to identifying, assessing and defining the best leadership for organizations, our teams bring their decades of expertise to help clients address their most complex leadership issues.

Valentin Ducros
Vae Solis

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