How can companies ensure board independence?

Maintaining a clear separation of governance roles is essential for ensuring board independence. This approach allows the board to fulfill its oversight responsibilities without interference from management, which is crucial for making unbiased decisions that are in the best interest of the shareholders and stakeholders. When governance roles are clearly delineated, it reduces the risk of conflicts of interest and improves the board's ability to evaluate management performance objectively.

This separation fosters a culture of accountability, where board members can independently assess company strategies, risks, and overall performance without management’s influence. It also ensures that the board can advocate for best practices in corporate governance and sustainability without being hampered by operational concerns or internal politics.

In contrast, integrating management into oversight roles risks diluting the independence of the board, as it may create situations where management influences decisions that should be independently evaluated. Focusing solely on executive compensation does not address the broader issue of board independence and can lead to situations where decisions are made more in favor of management interests rather than the organization's long-term health. Prioritizing local employment strategies, while important for corporate social responsibility, does not inherently relate to the independence of the board.