The Economy and the Future
by Monique Bachner
This article stems from the 3rd web “Coffee Chat” organised by ILA, the Luxembourg Institute of Directors on 15 April 2020, and hosted Monique Bachner, ILA Board member and a governance professional involved in various Boards.
Monique was joined this week by Luc Frieden and Carine Feipel. Luc is a partner in Luxembourg law firm Elvinger Hoss Prussen, as well as Chair of the Luxembourg Chamber of Commerce and of the Board of Banque International à Luxembourg (BIL). Carine is Chair of ILA, a lawyer and a board member on several entities, including a bank, insurance companies, investment funds and other undertakings.
The Economy and the Future
Whilst remaining difficult to predict the future, common themes from previous crises are helpful. During the 2008 crisis, the wider economy was largely affected later - in 2009 – so we should not be surprised if that happens again. The Luxembourg economy is exposed globally, with different shocks and exits from lockdown from different parts of the world likely to come at different times.
Opinion is that the Luxembourg government measures appear appropriate to ensure companies avoid needing to file for bankruptcy or redundancies right now. With Luxembourg’s AAA rating and good finances generally, Luxembourg should be in good stead to see its way through the crisis and to follow up with post-crisis support.
Unfortunately, we don’t know exactly when “post” crisis will be. It may take years before the travel and tourism industry is up and running again. Even WFH and avoiding physical contact will have impacts on the economy and on businesses.
Interest in ESG factors has increased - if we can act so quickly as a society to protect our health, why can’t we do the same for the planet? On the “social” component, WFH will continue to be feature of all our futures. For example, there are even law firms thinking to continue WFH and reduce office space.
Public image regarding ESG matters may not seem highest importance for some, however how companies behave now will determine their image later - including whether employees and suppliers will want to work with them. How did you protect your staff? Did you help society where you could? These are questions that will be asked. The CargoLux “air bridge” is clearly important for Luxembourg right now, but there are many ways companies can help. BIL had ordered masks and PPE from China and donated these to Luxembourg hospitals, other companies have repurposed equipment to create masks, ventilator and all sorts of other required equipment required.
Board diversity – in all aspects
With regard to board diversity in these times, the importance of a Board that is with appropriate professional and geographical diversity has quickly become evident. Overseas Board members such as those from China had shared their early experiences on Covid-19, which had led to taking precautions early on. The more varied the perspectives around the Board table, the more possible viewpoints on the situation. It is, of course, important to listen carefully to all of these diverse inputs to benefit and improve Board decision making and agility.
Do we know what Management are doing?
Are we asking Management where we are not sure?
Are we sufficiently supporting Management? Also their emotional well-being?
What is the frequency and type of reports we should receive from Management?
Are we setting the right example with our own remuneration and bonuses?
Are we also thinking about the future, and how it might look in a post-Covid 19 world?
Are we taking care of our staff, and adjusting expectations regarding performance and evaluations for this year?
How have we applied our ESG policy? Have we helped our community? Can we reduce environmental impacts for the future?
By Monique Bachner, ILA Board member and a governance professional involved in various Boards.