Consider the scenario where the subsidiary management needs to report to the parent company board.  Board packs will have been distributed in advance to ensure that board members and executives (the leaders) are able to review the facts, enabling informed discussions before reaching decisions.  They recognise that rushing to conclusions without a comprehensive understanding of the situation can lead to errors or misrepresentations.  If such diligence is indeed being practised by boards and management, why then do board evaluations and perception surveys reveal discord and dysfunction at decision-making levels?  Applying the principle of Occam’s Razor (the simplest answer is often always right), the cause of the strife can often be attributed to the fact that there was not full disclosure of information.  While the information as presented in the board pack may have been true and factually accurate, the whole truth may not necessarily have been reported.

As a practical example, management may have disclosed to the board that 70% of the organisation’s customers have been migrated onto the latest technology platform leading the board to believe that its customer migration strategy is on track. However, would the board reach the same conclusion if it had known that the remaining 30% of the customers who have not transitioned to the new platform, make up 80% of the revenues?

Greenwashing is another example where honesty and truth can become blurred.  The ambiguity of sustainable reporting standards and disparate and/or unverifiable metrics combined with performance incentives which are linked to ESG targets, increases the pressure on organisations (and their leaders) to exaggerate the positive impacts of their sustainability initiatives.  In these circumstances it becomes even more critical for board members and executives to match the reality (the whole truth) to what is being presented.  To be able to positively challenge factual data which is being presented in the context of prior commitments, board members and executives need to know what questions to ask.

“EY global survey of senior finance leaders and institutional investors, published in November 2022 revealed that 88% of investors believed that: “Unless there is a regulatory requirement to do so, most companies provide us with only limited decision-useful ESG disclosure.”

The Corporate Governance Framework® makes intelligence available by transparently disclosing whether ESG oversight is effective in supporting true and honest claims being made about inter alia diversity and inclusivity targets, employee engagement, human rights, ethics and greenhouse gas emissions.