Maria Castañón Moats is the leader of PwC's Governance Insights Center and previously served as the firm's Chief Diversity officer. In this episode she discusses the critical importance of incorporating diversity - and a clear understanding by board members of the board's role - to achieve board effectiveness.

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Links:

Maria Castañón Moats Bio

PwC's 2021 Annual Corporate Directors Survey

ESG oversight Corporate Directors Guide

Quotes:

"I am a woman, a Mexican-American woman, and admittedly, I did not know much about diversity and inclusion before taking the role [as Chief Diversity Officer at PwC]. I grew up in a small town in West Texas - El Paso - where everybody looked like me, so my diversity journey really started when I graduated from UT El Paso and started moving East all the way to New York. I like to share that because I don't want people to assume that I was an expert coming into that role."

"When I was leading diversity, we would often say that feedback is a gift because if people aren't giving you good feedback, they probably don't care about you very much."

"'Why would boards really lean into this [diversity] and really give great advice to management?' Because that's what boards do, they give advice to management, they provide that oversight."

Big Ideas/Thoughts:

One of my goals was getting the board of directors leadership to be more diverse. Our CEO was very open to not only diversifying the leadership team, but also thinking about how you get a more diverse board.

A question to be asked about board effectiveness is: how diverse is that board? How diverse are their experiences? And is that diversity and those experiences appropriate given the times we live in today with all the social changes, with climate, everything we talk about on ESG. How does that fit for the purpose of today and the future and not necessarily yesterday?

Board effectiveness really means "what's the value of the board to an organization." And in particular, what's the value of the board to that management team and to that CEO? Are they really giving the CEO the right advice on strategy and the risks associated with that strategy? Are they really those trusted advisors, and then are they exercising this fiduciary responsibility to shareholders and stakeholders at large?

As you know, Joe, what investors want today is to see the numbers. I tell people when I meet with directors, it's not that they just want to kind of understand your demographics and get a baseline, but they really want to understand the goals and where you're going as an organization, then as a board, how you hold management accountable to those goals based on what metrics and data.That's what investors are looking for.

Offboarding. We need to critically say to ourselves, "The feedback is telling me I probably have given all the best I could to this board, and I should now move on, and, oh, by the way, maybe I can sponsor someone to come onto this board. Maybe that's the last big thing I can do here, and maybe it's someone that's not from the familiar network, someone I've been mentoring to get onto a board."

What I think that's different when you think about climate versus diversity is we've been talking about diversifying boardrooms and management teams for decades, and that pace has been, let's just say, unacceptable, until recently. There's a need to accelerate that pace of change. With climate, it's going to accelerate much faster, people want to see change much faster. We're not going to get a ten-year timeframe to act on climate change and related risks.