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Against the backdrop of rapidly changing and complex operating conditions for companies and their supervisory bodies, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) recently published “Corporate Governance Guiding Principles for Board Oversight.” Supervisory Boards can use these to review their information flows and decision-making processes, improve their self-evaluations, and structure the onboarding and continuing education of (new) Supervisory Board members.

COSO is a private-sector organization dedicated to improving corporate governance and oversight. To this end, COSO regularly publishes comprehensive frameworks and guidelines. This is also the case with the new guidelines, which were developed in collaboration with PwC. These are aimed directly at Supervisory Boards and are intended to offer them a practical approach to shaping their dialogue regarding the interplay of various supervisory duties and their fulfillment within the respective corporate context.

All guidelines aim to sustainably promote long-term value creation for companies, strengthen their performance and resilience, and ensure leadership continuity and responsible incentive systems. The individual guidelines are briefly outlined below. Details can be found here .

Guideline 1: Board Governance Structure

The Supervisory Board establishes a governance structure in which its tasks, responsibilities, and decision-making powers are clearly defined.

Guideline 2: Board Accountability

The Supervisory Board fulfills its fiduciary duties in accordance with applicable laws and governance standards and respects the rights of shareholders. Through its oversight, it contributes to proper disclosure.

Guideline 3: Board Composition and Leadership

The Supervisory Board brings together a diverse range of expertise, experience, and perspectives to act with integrity and objectivity, and includes an appropriate number of independent members. It regularly reviews its composition and succession planning.

Guideline 4: Board Effectiveness

The Supervisory Board regularly assesses its efficiency, monitors internal and external changes, and optimizes its governance practices to strengthen and further develop its oversight.

Guideline 5: Purpose, Mission, and Values

The Supervisory Board regularly reviews the company’s purpose, mission, and values and monitors their alignment with the strategy, corporate culture, incentive systems, and workforce practices.

Guideline 6: Culture, Conduct, and Tone at the Top

The Supervisory Board sets clear expectations regarding integrity and ethical conduct, exemplifies these values in its own actions and decisions, and expects the same from the Management Board.

Guideline 7: Strategy, Objectives, and Performance

The Supervisory Board provides an independent perspective on strategy (and strategic goals), approves – where necessary – significant measures, and monitors their implementation. To this end, it reviews the company’s performance against agreed-upon goals and key performance indicators.

Guideline 8: Technology and Data

The Supervisory Board monitors the company’s technology and data practices to ensure that they are managed in line with the strategy and risk appetite and are used to enhance performance and resilience.

Guideline 9: Stakeholder Engagement

The Supervisory Board oversees the Management Board’s engagement with stakeholders, promotes appropriate investor communication, intervenes directly when necessary, and incorporates stakeholder feedback into strategic discussions.

Guideline 10: Executive Leadership and Succession

The Supervisory Board monitors executive development and succession planning and regularly reviews the human resources strategy, the executive talent pool, and the competency requirements for implementing the strategy.

Guideline 11: Executive Performance and Compensation

The Supervisory Board evaluates the performance of the members of the Management Board, reviews their compensation system, and monitors the compensation and incentive structures established within the company.

Guideline 12: Risk Management and Internal Control

The Supervisory Board oversees risk management and internal controls. In doing so, it also requires the Management Board to provide transparency regarding where (generative) AI is used in financial reporting and the associated control mechanisms, and how the resulting risks are managed.