“European bords have made tremendous progress towards diversity”3 questions to Lee Suet-Fern, Global Corporate Governance Leader

An accomplished lawyer and seasoned corporate governance expert, Lee Suet-Fern shared over three decades of experience advising Chairmen, CEOs, and major corporations across Asia-Pacific, Europe, and the United States.

As a highly respected Independent Board Member for numerous major public companies, she possesses deep insights into the unique governance structures of different regions and a strong understanding of geopolitical risk management. Known for her integrity, strategic thinking, and ability to foster constructive debate, Lee Suet-Fern has shaped the evolution of board governance and contributed to advancing Diversity, Equity, and Inclusion (DEI) and Environmental, Social, and Governance (ESG) principles globally.

You have a considerable experience as an Independent Board Member in major public companies across the world, you also have deep experience advising Chairmen and CEOs as a lawyer.

How do you compare and contrast the governance and the inner working of a board in Asia Pacific and in Europe or in the US?  Is there a convergence towards global standards and practices?

In the Asia Pacific, board members are often social acquaintances of the Chairman (“friends from the golf course”). The nature of the relationship between the Chairperson and the independent board members has an impact on the nature of the discussions and their preparedness to question.  The Chairperson can often be very dominant, and actual voting generally does not take place, with the Chair eventually articulating a conclusion, which may not on occasion be the view of the majority.  Board members ‘know’ to stay silent and accept rather than rock the boat. Additionally, for cultural reasons there is a reluctance to voice dissent and express conflicting views. Points are generally never raised forcefully.

In Europe, I was fortunate to have been on the boards of three leading global multinationals (AXA, Sanofi, and Banque Rothschild & Co in France) and over the years, I have separately advised many boards all over.

In my experience, in France, there is a healthy culture of debate.  Board members are unafraid to express differences in views with conviction. No one seems to take it personally. I have seen a lot of very tough questions being asked. Board members are prepared to challenge Management on its decisions and want to understand the decision-making process and how management reaches conclusions.

It is common to vote on specific matters and register disagreements which are then recorded in the minutes of the board. Board members are willing to be recorded as being in the minority on a specific issue. It reflects a high level of integrity. It is a real strength of French boards. I have witnessed the evolution of French boards from a mostly “old boy” network to boards with fiercely independent and effective members.

What is your perspective on DEI (US) / ESG (Europe)? Is it here to stay or is it a temporary trend? Have we seen “Peak ESG”? What is the perception in Asia Pacific?

DEI and ESG are not quite the same.

On DEI, I think European boards have made tremendous progress towards diversity and the representation of women, with French and German boards being particularly exemplary. Initially, I felt some resistance.  Over time, women on the boards, through their active participation and contributions, convinced everyone.

I think the arrival of women has considerably improve the functioning of boards. It has raised the level of preparedness among board members. Newly appointed women were always well prepared and had done their homework. It was embarrassing for historical board members to be less prepared. They had also to be more thoughtful and participatory.

Newcomers should be encouraged to speak up. It is the responsibility of the Chairperson to ensure that it is the case.

ESG has not yet taken root meaningfully in Asia. Decades of economic growth in Asia have raised living standards and generated new wealth, but Asia now produces a majority of the planet’s carbon emissions, suffers considerable pollution and faces rampant biodiversity loss.  Asia still sees itself as playing catch up in terms of economic and living standards compared to Europe and North America. As a result, it’s still consuming a lot of carbon-based energy.

The younger generation in Asia is more concerned. However, the tensions between sustainability and profitability are very acute, exacerbated by this sense of the need for ‘catch up’. The business case for sustainability is very clear.  Reporting and voluntary action are unlikely to be sufficient to force changes. Whether market forces and self-discipline will be enough or whether government regulations will be required remains an open question. Whether Asian governments will impose such regulations is also debatable.

There are relatively few board members from the Asia Pacific region in Europe and equally few European Board members in Asia-Pacific. Beyond the obvious practical and logistical hurdles, are there any other obstacles? How can further progress be achieved?

It is critical that board bring in candidates from Asia Pacific companies as they can provide a geopolitical perspective and an understanding of global strategic opportunities for businesses. Board members from Asia Pacific need to help European boards understand non-financial risks and offer broad, global perspectives, especially with respect to strategic opportunities rather than a narrow point of view. These skills are far more important at board level rather than narrow technical expertise which companies can seek from within or without.

International candidates need to understand and appreciate the importance of in-person meetings. In the context of the board, a lot of informal discussions take place in the corridor or at the coffee machine. These are natural and normal supplements and complements to formal board discussions and allow the opportunity to clarify or discuss matters outside the formality of a board agenda and timing.  In addition, informal face-to-face allows board members to get to know senior management. Zoom meetings are simply not the same.

Fluency in languages and cultural understanding is very important. For example, some Asian executives may be highly competent but may not be fluent in foreign languages or be comfortable in an unfamiliar environment; plus, there may be a cultural reluctance to express disagreement.

The best candidates from the Asia Pacific for European boards often have studied abroad and lived in several countries, which gives them a better understanding of cultural differences and enables them to contribute an international perspective.

There are very few European Board members in Asia. Such members are mostly confined to International advisory boards which are not real governance bodies but more social in their nature. Perhaps Asian boards themselves need to first become more dynamic and receptive, and less driven primarily by major shareholder and/or chairperson agendas for any contributions by European directors to be meaningful.  That said, with growing shareholder activism occurring in corporate Japan, the evolution of Japanese board may be an interesting space to watch.