ESG (Environmental, Social, and Governance) topics are on the agenda of the world’s business leaders. In this interview, we had the opportunity to discuss ESG and the role of technology in supporting corporate governance with Michaela Castelli, President of the Italian Acea Group.
President Castelli also shared her vision of how digital tools like Sherpany can help the board of directors and the management become more efficient.
Sherpany: President Castelli, are Environmental, Social, and Governance (ESG) topics more frequently addressed in the boardroom nowadays? Why do you think the awareness towards these matters is increasing?
Michaela Castelli: Yes. There is a growing attention on ESG issues by the board of directors (BoD).
The evolution of the external context - in terms of social, regulatory, competitive, and stakeholder dynamics - increasingly steers the attitude of directors in taking a stand towards a sustainable business strategy. Investors, too, pushed by the ongoing European regulatory developments (e.g. sexual and reproductive health and rights, action plan on sustainable finance), are introducing approaches that use environmental, social, and governance criteria to evaluate and select investments.
It can be assumed that the evolving regulatory environment has driven a first phase of change. Subsequently, however, the entire reference framework acquired greater attention and awareness, at all levels, leading to the emergence of best practices. In this sense, for a listed company, corporate governance best practices are an essential element of a better business management.
Sherpany: In your perspective, what are the main ESG challenges organisations face today?
Michaela Castelli: The Agenda 2030, including the related 17 UN Sustainable Development Goals (SDGs), is one of the main references to identify the scenario of challenges organisations face today. It is no coincidence that one of the latest policy documents drawn up by the Juncker Commission in the wake of the renewal of EU governance bodies mapped out the scenario for a transition to a sustainable Europe by 2030 in the pursuit of SDGs.
The scenario also includes specific challenges for the utility sector, including the following goals related to:
Sherpany: In what ways does technology support the BoD in managing these challenges?
Michaela Castelli: ESG issues, as it can be noted in every discussion forum, are strongly interlinked. Economic, environmental, and social dynamics are cross-related, and their impact is redistributed in their own domains. The aspects and variables behind these dynamics are now studied thanks to the use of the most advanced technologies, such as big data. The information that runs through public service networks, such as electricity and water, is now increasingly digitised. Hence,
and, supervise the business policy with the support of an adequate knowledge base.
Sherpany: You serve in several mandates (e.g. ACEA and Recordati). What are your suggestions to improve and ensure organisational visibility across companies and entities?
Michaela Castelli: I believe we must always remember that people remain an essential and decisive factor in guaranteeing the success of a company. From this point of view, a strategy has a much greater chance of success if it is backed by a deep-rooted corporate culture and shared common values and rules for all those who are called upon to implement it through their own daily actions. However, these must be behaviors and values that unite all: employees, collaborators, managers, and therefore also the corporate bodies operating within the same organisation.
In this context, it is essential that the company’s top management plays a driving role in ensuring that the values of compliance and transparency are deeply rooted in the corporate culture.
Sherpany: Considering your role as a chairwoman, how is an executive and board portal useful for this specific role?
Michaela Castelli: A software dedicated to meetings of corporate bodies can certainly facilitate immediacy and security of information flows of directors. It also allows for easier accessibility, better interaction, and a guarantee of traceability of flows. However, I still encounter some reservations towards these instruments, most of the time due to a lack of full mastery of them. From this point of view, I believe it is essential to work with solutions that reconcile security with ease of use.
The new technological solutions should further evolve to support the activities and the functioning of the board of directors. Let me explain myself with a fairly common example: currently, board meetings are driven by an agenda filled with particularly substantial presentations and long executive notes. This could lead to meetings where there is not sufficient space to discuss important issues. The executive and board portal can facilitate a more agile and effective management of the work, thus allowing the board to focus on the most relevant issues.
Sherpany: How do today’s board meetings differ from those of ten years ago?
Michaela Castelli: The differences that can be seen in the functioning of the board of directors are attributable to changes that took place in the last years. On one hand, there has been a differentiation of the areas allocated to the corporate body, as well as an increasing involvement in issues of governance and other issues that are not strictly business-related. At the same time, also as a result of regulatory or self-regulatory interventions, we have witnessed an increasing diversity in skills and competences within the board. The combination of these aspects has had a significant impact on the approach and the internal dialectics within the board, making it more articulated and dynamic.
Sherpany: In the next years, how do you see technology supporting leaders in pursuing ESG topics?
Michaela Castelli: The technology useful to support the top management will be the one that allows them to be promptly aligned regarding governance, company’s performance, compliance with planned strategic objectives, and exposures to ESG related risks.
Sherpany: What suggestions would you give to technology companies when developing new software solutions to support business leaders?
Michaela Castelli: I would suggest technology companies to focus on effectiveness by allowing the management to use their time in the most fruitful way.
Sherpany: At last, what other topics may be on the board's agenda in the upcoming years and why do you think they will become more prominent?
Michaela Castelli: It is difficult to express an opinion on which topics may become subject to examination and decision at board level. This may depend on a series of external factors such as the regulatory context, the evolution of best practices, or the particular context in which one or more companies will operate.
Personally, however, rather than seeing an increase in the amount of subjects on which the board will be called upon, I imagine that initiatives aimed at providing directors with adequate knowledge (on the company’s business sector, as well as its dynamics, evolution, and main risks), can be applied on an increasingly larger scale.
Appropriate use of these initiatives could enable directors at board level to play their role more effectively, consciously, and consistently. These are activities that can still evolve in many ways, and for which in the future a digital platform can prove to be a useful support for the boards of directors.
Michaela Castelli is the President of the Italian Group Acea.
Castelli has extensive experience in dealing with corporate and financial market laws. Between 2001 and 2009, she held the position of Head of Legal Affairs in the Italian Stock Exchange (Borsa Italiana) and dealt with operations concerning corporate governance and compliance.
She is also a lecturer, author of sector publications, keynote speaker, and a member of several boards. Currently, she holds positions in inter alia, SEA, Nexi SpA, Recordati SpA, and La Doria SpA.
Acea is a leading Italian energy and water supply company with over 6.000 employees.