Following the recent and 19th session of Board Level Corporate Governance Training in the Middle East, here are some reflections that ECA wishes to kindly share with its fellow members.

Corporate governance may be thought of as a sword and a shield.

The question that comes to one’s mind is the following:

Why a sword and a shield. In short, why this duality?

  • First and foremost, good corporate governance can be a sword against corporate misconduct incidents and effective mitigation of operational risks.
  • Secondly, good corporate governance can be a shield for the protection of shareholders and all stakeholders as a whole.

What exactly is “material” to a report may vary on “who” you are addressing. It is therefore not surprising that the definition of materiality is a central issue of concern for all corporate governance professionals.

This brings us to the realisation of the current prevailing ideology: “Shareholder Primacy”.

You will find convincing answers in the following article (attached Harvard Business School PDF). 

Materiality in Corporate Governance:

The Statement of Significant Audiences and Materiality

By Robert G. Eccles and Tim Youmans

Harvard Business School, September 3rd, 2015

It is therefore all about being “truthful” and thus “independent” in disclosing material issues for strategy and reporting (performance v. risk) to significant multi-stakeholder(s), which has the following four pillars:

  1. Fiduciary duty focusing on “whom” this duty is owed to;
  2. Relevance of materiality in the context of corporate governance;
  3. Audience – focused materiality; and
  4. An annual board statement of significant audiences and materiality.


Prof. Emmanouil Ion

ECA Compliance Committee Member