Enterprise Values vs Enterprise Value

This report features findings from the Lex Mundi Summit 2022, Enterprise Values vs. Enterprise Value: Governance in an Era of Sustainable Transformation, and follows on from the conclusions of last year’s report – which concluded that the pandemic had created a catalyst for the simmering fragmentation of the business landscape.

Featuring findings from the most recent Lex Mundi General Counsel Summit, held in Munich, it explores how the continued societal focus on sustainability is rewriting the rules of global capitalism, forcing general counsel to increasingly serve as a bridge to a more diverse range of stakeholders.

Each year, Lex Mundi works with members of the global general counsel community to identify a core challenge to advancing corporate strategy. This year we gathered experts, general counsel, and law firm partners in Munich for a two-day summit to explore and compare approaches to providing legal guidance to company management, business teams, and boards. The report combines redacted evidence from our consultations with additional research and analysis.

The report breaks down into three key areas of focus: The Management Squeeze, The New Capitalism, and Supply Chain Integrity. Amongst the key findings:

• Corporate governance is less dictated by the Board of Directors and more by a range of stakeholders from varying backgrounds with wider interests and goals. This wider pool of stakeholders has resulted in an expanding number of KPIs coming to the forefront, including social and sustainable targets, which need to be balanced carefully with financial targets and regulatory compliance.
• The evolution of ESG targets in corporate governance is unique in how quickly it has developed from being a voluntary internal standard to full legal requirement. GCs also noted the importance of recognising the infinite nature of ESG – there is no set end, and therefore it is important that they can look ahead of the curve for the next big flashpoint.
• Traditional Corporate compliance is one thing, but increasingly supply chain integrity is taking on equal importance – particularly as COP26 targets create greater exposure to the risk of Modern Slavery: The report highlights that supply chain compliance issues are at the heart of the ESG agenda and addressing these will significantly add to the responsibilities of general counsel. On the operational level, diligence in acquisitions and business partners has become more demanding, contracts will need to be terminated or redrawn to account for new regulations, and employee guidelines and policies will need to be updated under general counsel guidance.
• Fundamentally, commitments to sustainability cannot be perceived by employees to be simple talking points or “greenwashing” attempts by the board. All of this means that more responsibility falls on the board to have the competence to set the tone from the top – leadership is key to driving corporate culture and a company’s commitment to sustainability.

The report concludes with guidance for General Counsels and their teams on the information and tools needed to balance the competing pressures whilst navigating complex risk management.