Board's responsibility amid ‘Covid-19’ pandemic

Covid-19 thru coronavirus has impacted every aspect of life.  Billions of dollar have vanished overnight.  Thousands of lives lost so far.  And lacs of people have been impacted across hundreds of countries.  It’s a pandemic.  

Each responsible board and its members (directors) must take quick action in response to the situation and also communicate through its website or any other media, to keep its stakeholders well informed about their action and assure them of their safety and protection thru right and timely actions.

What board of a company should be taking the steps to deal with Covid-19 to ensure the wellbeing of all the stakeholders.  I categories these stakeholders in the following manner in the order of action priority:

i.    stakeholders where human lives are impacted

ii.   stakeholders who are impacted due to disruption in business continuity

Globally most of the companies have displayed a great number of concerns for their employees and towards their social responsibility for curbing the virus spread.  All these companies have come out with policies like mandatory work from home, physical meeting restrictions, travel restrictions, suspending all company events or participating in such events etc.

To make the effort more effective, to avoid rumour-mongering, and to stop untrue information getting circulated about the company, it would be a good idea for every company to communicate thru its official channels like website, blog, twitter etc.  

Actions Suggested for the Companies as  Good Governance Practice:

The board of directors, if not met so far, must meet urgently, maybe on a shorter notice, to discuss Covid-19. They should take a call if they can meet more frequently or they can set up a committee to monitor the situation by meeting more frequently, and keep informed the company’s board and stakeholders on a regular basis. The committee charter should clearly define the objectives keeping in mind the action required to be taken to protect the interest of all the stakeholders and keep informed them of their actions: 

• Current situation of Covid-19 in the company- like on a daily basis
• Reported cases of Covid-19 in the company, if any –  on daily basis
• Action taken by the company
• Word of caution to its employees, customers, vendors and its plan of action   where there are changes in ops processes
• Update the stakeholders and public at large on a regular basis thru its website, PR, twitter, blog, and other social media platform.

      For example, companies in Retail – the committee should quickly decide and take the required steps to manage the ‘people’ inside their stores.  Recently, I saw more crowd at Dmart  (Avenue Supermarkets Ltd.) than the normal crowd and that is really a dangerous scenario and of course,  irresponsible inaction on part of the management of Dmart.  Same way, I observed at the Big Bazaar stores.  In fact, one of the cashiers had some problem with his eyes and people were asking him – ‘what was wrong with his eyes?’  It was frightening.  All these companies should be socially more responsible at least at this time.
 

Few of the industries which are deeply impacted are like aviation, hospitality tourism, software consulting, retail etc. 

Examples of how companies have been issuing its guidance of earning:

PayPal – 

SAN JOSE, Calif., Feb. 27, 2020 /PRNewswire/ -- PayPal Holdings, Inc. (NASDAQ: PYPL) has been carefully assessing the effect of COVID-19 as conditions continue to evolve. We are prioritizing the health and safety of our employees and supporting those in need. Our thoughts continue to be with the communities and individuals affected by this disease.
PayPal's business trends remain strong; however, international cross-border e-commerce activity has been negatively impacted by COVID-19. We currently estimate the negative impact from COVID-19 to be an approximate one percentage point reduction, on both a spot and foreign currency-neutral basis, to PayPal's year-over-year revenue growth for the first quarter, as compared to the revenue guidance provided on January 29, 2020

https://www.prnewswire.com/news-releases/paypal-updates-first-quarter-2020-revenue-outlook-based-on-coronavirus-impact-301012673.html

Genpact -

“We provided 2020 Company guidance in our earnings release...We are not able to predict at this time what impact, if any, the spread of the coronavirus strain known as COVID-19 and related travel restrictions will have on our 2020 financial results,” the company told the US Securities and Exchange Commission.

https://economictimes.indiatimes.com/markets/stocks/news/genpact-flags-coronavirus-as-risk-factor-says-unable-to-predict-impact-on-2020-revenue/articleshow/74454261.cms?from=mdr

See more examples as – 

“Coronavirus is spreading fast – in company earning calls”

https://qz.com/1808041/coronavirus-mentions-are-multiplying-in-company-earnings-calls/

https://www.marketwatch.com/story/what-apple-walmart-and-other-us-companies-are-saying-about-the-coronavirus-2020-02-18

The boards may also have to visit their Risk Management policy, Business Continuity Plan and other related policies on top priority.   

Regulators’ Role:

Regulators must give emphasis on asking companies to show their plan of action for dealing with the pandemic thru their websites, inform to the stock exchange and also talk about the impact on their future earnings.  They also should state how they are helping the environment and the society for curbing and managing the pandemic in general.  It would set up a good example responding towards the environment, social and governance.