MSCI (ticker MSCI), and other FinTech vendors have got the “Governance” component of ESG all wrong. Good governance has nothing to do with identity politics and everything to do with ensuring that companies have highly qualified leadership in place at the Operating and Board levels.
For example, MSCI’s Governance scoring system (table below), captures zero information about a particular company’s financial performance under a particular CEO, a given CEO’s operating history, a CEO’s M&A track record, comparing these elements to the peer group and more. Same goes for assessing Corporate Boards. Below is MSCI’s Governance measures in methodology.
Speaking from experience, I have not been in a single Board meeting where I felt confident that our Board members (back when I led global Corp Dev for Solera Holdings), knew how our company generated Revenue, EBITDA, nor what our strategic competitive advantages were, much less why we executed a particular acquisition, despite my highly detailed M&A rationale letters crafted for the Board. Solera was not unique, that too I know from experience. These are the details that matter. At CEORater, we capture relevant information about Corporate Governance. Performance-driven metrics that measure CEOs and C-Level execs on subject matter that drive a business forward and stock prices higher.
Contact CEORater for further information on performing C-Level due diligence: info@ceorater.com or jmaietta@ceorater.com
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