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Embracing A Culture of Openness, Improvement and Self-awareness

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Tomorrow’s Company together with The Chairmen’s Forum has recently published its latest guide, ‘Tomorrow’s Corporate Governance – Improving Board Evaluation for Greater Board Effectiveness’.

Board evaluation is an integral part of corporate governance and helps boards operate more effectively.

The guide explores best practices and behaviours focused on improving board dynamics. A guiding set of principles has been developed to get the best value fro m the board evaluation process. This includes:

  • Defining board effectiveness and a shared view of the organisation’s purpose, value and mission to create a ‘board mandate’
  • Appointing an external evaluator who is independent, experienced and consistently high quality of external board evaluators.
  • Widening the sources of feedback to include non – board member executives, senior management and employees to give a more rounded view of the value of the board; harnessing the power of social media as a mechanism for getting feedback from customers and society at large.
  • Capturing both quantitative and qualitative data to inform internal and external evaluations.
  •  Disclosing the results to create an action plan based on the results of the evaluation and learning process.

Over 30 experienced chairmen and a similar number of company secretaries, investors, leading evaluators and other specialist discussants were consulted for this guide to highlight some of the widespread and recurrent themes and issues.

Quotes commenting on the guide:

John Barton, chairman of easyJet plc and Next plc , in a foreword to the guide writes:

“The board… is arguably the most important body in any company. How it exercises its duties and influences its business is probably the most important issue facing chairmen and directors today. To make sure it is effective a board must have some way of measuring and reviewing its performance with a clear path for updating and improving itself. This guide contains many useful tips on how to conduct and get value out of the evaluation process.”

Sacha Sadan, corporate governance director, Legal and General Investment Management, in his thought piece writes:

“As long – term investors we want to help companies be as good as they can be. An effective board is central to any successful company…. For us, board reviews are a key part of being a good owner or steward of the business.”

Richard Sermon, chief executive, The Chairmen’s Forum:

“This guide has been written primarily with chairmen in mind – it is for each board to determine how it undertakes ‘a formal and rigorous, evaluation of its own performance’ each year and the basis upon which it conducts ‘an externally facilitated review’ every three years. This is not an area for a ‘one size fits all’ approach and so you will find nothing which is prescriptive in these pages but rather insights, ideas and examples of ‘what good looks like’.”

Mark Goyder, founder and chief executive, Tomorrow’s Company: “The challenge of board evaluation lies in fulfil ling both the internal purpose – which requires the privacy of the confessional – as well as the external purpose, which requires a public  sharing of what has been learned and what may change. So far only a few have managed it. It is hoped that this guide will help more do so.”

Background:
Tomorrow’s Corporate Governance: Improving board evaluation to achieve greater board effectiveness is the fifth in a series of guides and tool- kits from the Tomorrow’s Good Governance Forum for use by chairmen, boards an d advisors, to help achieve practical change. This guide offers examples of good practice to help chairmen get the best value from the board evaluation process.

The origins of this guide lie in discussions held with Sir David Walker, John Barton, Geoffrey Howe, Richard Sermon and a number of leading chairs which identified that it would be helpful to capture some of the common issues and learning from the still evolving practice of board evaluation.

The report and information about the Inquiry are available at: http://tomorrowscompany.com/publication/improving-board-evaluation/

Economy

Will Self-Driving Cars Be Better for the Environment?

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Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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