Insolvency in air and space and the Cape Town Convention

The High Court of Australia is set to decide on an issue of interpretation of a clause applicable to secured transactions involving international transactions re aircraft. This will also have implications for transactions in the space sector.

The Cape Town Convention (the Convention on International Interests in Mobile Equipment) is relevant for secured transactions re Aircraft, Spacecraft etc. Since airline insolvencies are unfortunately a reality in the aftermath of Covid, the Cape Town Convention has become more relevant than in the past. With corporate activity in space heating up, it is likely to become relevant in the space sector as well. The experience of the use of the Cape Town Convention in the airline industry will be instructive.

Aircraft protocol

The Cape Town Convention and the Protocol on Matters Specific to Aircraft Equipment (Aircraft Protocol) has been in the news thanks to the Virgin Australia insolvency. The Federal Court of Australia (FCA) in Wells Fargo Trust Company, National Association (trustee) v VB Leaseco Pty Ltd (administrators appointed) interpreted Article XI of the Protocol and the appeal is currently being heard in the High Court of Australia (HCA).

The Convention and Protocol establish an international legal system for security interests in aircraft equipment. In a forthcoming book chapter (Airline Insolvencies in India) Hitoishi Sarkar and I discussed Article 3(1) of the Convention which provides that the Convention is applicable if the debtor is situated in a state that is party to the Convention.

We explained Article XI of the Protocol as follows (references omitted; emphasis added):

The most central insolvency provision pertaining to aircraft is provided in Article XI of the Aircraft Protocol which provides contracting States with two alternative provisions. It then provides that contracting States may choose either alternative or choose to adopt neither of the alternatives. If a contracting State elects one of the alternative versions of article XI, then that version will apply when the contracting State is a debtor’s ‘‘primary insolvency jurisdiction.”

Under Alternative A to Article XI of the Aircraft Protocol, the debtor’s ‘‘insolvency administrator’’ or the debtor must give possession of the relevant aircraft object to the creditor holding an international interest in the object before the expiration of a stipulated waiting period. The alternative permits a Contracting State, in its declaration with respect to that article, to specify the applicable waiting period’ that will apply when the Contracting State is a debtor’s primary insolvency jurisdiction.

Under Alternative B, the insolvency administrator or debtor, on a creditor’s request, is merely required to give the creditor notice whether the administrator or debtor “will cure defaults and perform future obligations or permit the creditor to take possession of the aircraft object. This alternative does not provide a creditor with any right to obtain possession of an aircraft object in insolvency proceedings.

Since Australia has opted for Alternative A, “give possession” was being interpreted by the FCA. In the court’s view “give possession” does not include redelivery and so it is up to the creditor to “come and get it“. (There is an excellent article on this by Professor David Brown “Give” and “Take”: Virgin Australia, the Cape Town Convention and Aircraft Protocol (2021) 21(1&2) INSLB 21 where he endorses this interpretation and also discusses further about the “commercial sense” of the court’s interpretation.) This is currently being heard in the High Court of Australia (as Michael Murray reports over at his blog) so we will have to watch how this goes down.

Space protocol

The Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Space Assets (Space Protocol) which is not yet in force has a similarly worded provision.

Alternative A under Article XXI also states as follows (emphasis added):

Upon the occurrence of an insolvency-related event, the insolvency administrator or the debtor, as applicable, shall, subject to paragraph 8 and to Article XXVI(2) of this Protocol, give possession of or control over the space asset to the creditor no later than the earlier of:

(a) the end of the waiting period; and

(b) the date on which the creditor would be entitled to possession of or control over the space asset if this Article did not apply.

Thus, the interpretation of the HCA is likely to be relevant to insolvencies in the space sector as well.

Climate change disclosures – NZ edition

New Zealand has gone and done it. It has introduced the Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill to Parliament. Once passed, it will require certain financial sector entities to make audited climate related disclosures from 2023. The entities in question are those that are considered to have a higher level of public accountability per 461K of the Financial Markets Conduct Act 2013. They include listed issuers, large banks, large non-bank deposit takers, and large insurers, and large managers in respect of managed investment schemes. The Task Force on Climate-related Financial Disclosures will provide the framework for disclosures and External Reporting Board will prescribe standards.

The climate disclosures should be audited by qualified assurance engagement practitioners. Climate related disclosure assurance bodies should be approved by the Financial Markets Authority. Over and above the audit requirements, any entity that is subject to the climate reporting will, along with each of its directors, will be liable for conviction under the FMCA (s 461ZC) if they knowingly fail to comply with the climate disclosure requirements.

I had previously discussed climate related disclosures as a regulatory option in the context of the SEC in the US considering corporate disclosure requirements regarding climate change impacts. The New Zealand edition of climate related disclosure requirements will however rely on assurance practitioners with technical expertise to audit the disclosures.

Pre-packaged insolvency resolution for MSMEs comes to India

The IBC has had an exciting new amendment via ordinance a few days back (4 April, 2021)! It finally gives us (MSMEs) a pre-pack system of restructuring. Put another way, it works as a debtor in possession (DIP) model of insolvency process. This is a lifeline for MSMEs and others who are eligible because normal IBC filings had been suspended (bad move!) as a post-pandemic measure. (The second recital is trying to spin the suspension as a measure to “mitigate distress” but well, the move likely caused some distress too.)

In any case, the IBC process was not a DIP model so the amendment has rightly caused excitement in the industry. As one news article puts it, ‘corporate debtors remaining in possession is a global best practice in such schemes’. Another great feature is that the debtor company gets to submit a resolution plan first.

So how does it work?

An MSME that has defaulted on its debts can apply to initiate a pre-packaged insolvency resolution process. The riders are that it should not have already undergone a pre-pack process or a full insolvency resolution process in the preceding three years; it is not undergoing a insolvency resolution process or be subject to an order of liquidation; and it should be eligible to submit a plan under s 29A. Once all these boxes are ticked, a majority the board of directors need to declare (in a prescribed form):

(i) the company’s intention to file within a certain period of time (not more than 90 days);

(ii) that the prepack process is not being initiated to defraud any person;

(iii) the name of the insolvency professional (IP) who is proposed and approved by the financial creditors who are not related parties; and

(iv) A members special resolution should approve the decision to initiate the pre-pack.

Finally, the company must get the approval of financial creditors (excluding related parties) representing not less than 66% in value of the financial debt due to them. By the time financial creditors get to the stage of approving the initiation of the pre-pack, they should have been provided with the company’s resolution plan (known as the base resolution plan) and other details. Hence the term ‘pre-packaged’ process.

When the pre-pack application is filed, the NCLT has 14 days to admit or reject (if the application is not complete) it. The moratorium kicks in from the filing date and a public announcement of the prepack process is made by the NCLT. The pre-pack resolution process should be completed within 120 days. The ‘process’ simply means the approval of the resolution plan (which can be different from the base resolution plan) by creditors and its submission by the IP to the NCLT. To that end, the IP convenes creditors’ meetings, the first of which should be within 7 days of initiating the pre-pack. If they cannot approve a resolution plan, the IP submits an application to terminate the prepack process. If a plan is approved by the creditors, then the NCLT approves or rejects the plan on the same basis as under the insolvency resolution process.

The IP, along with the usual functions during the normal insolvency resolution process seems to have one additional function during the pre-pack process – to monitor management of the affairs of the corporate debtor. The board, while remaining in control of the company, is required to ‘make every endeavour to protect and preserve the value of
the property of the corporate debtor, and manage its operations as a going concern’ (s 54H(b)). There is also an option for the creditors to apply to change this default DIP model and put the IP in control by a vote of at least 66% of the voting shares (s54J(1)). The NCLT will approve such a request if it finds gross mismanagement, or fraud or other issues.

Thoughts

Hopefully the prepack will play out as well in practice as it looks in theory. There is room for appealing the approval of a resolution plan – ideally there will not be too many of those. If it does work well, we can expect this to be rolled out for larger companies too. In fact, NCLTs should suggest companies explore the prepack option before filing for the corporate insolvency resolution process considering the huge case load the NCLTs already have.

Interesting post-Nevsun article by Ahmad

I had blogged about the Canadian Supreme Court decision in Nevsun in my Fantastic New Torts and Where to Find Them series and here. Hassan Ahmad has posted his forthcoming article titled Transnational Torts against Private Corporations: A Functional Theory for the Application of Customary International Law Post-Nevsun on SSRN where he makes an interesting observation about the Nevsun decision:

I am supportive of a move to encapsulate private MNCs within CIL’s [customary international law] ambit. MNCs’ size and wealth has precipitated inordinate amounts of power and authority over the persons and places with whom they interact at the international level. However, there is a troublesome dissonance in Nevsun if CIL is to retain its symbolic nature of accounting for public and exceedingly heinous conduct and yet be available on every occasion a corporate actor invests and subsequently commits harm outside its home state.

His article then goes on to propose, as the title suggests, ‘a functional approach for corporate customary international law tort claims’.

A paragraph in the article’s conclusion sums it up nicely:

For activists and academics alike, the Supreme Court’s decision in Nevsun was a watershed moment that may eventually serve as a starting point to free international law from the confines of ‘statism.’ It may also signal a turning point in a cognizable governance gap or missing forum for corporate human rights violations in weak governance zones. But the majority’s decision left too much to the imagination as it did not adequately distinguish CIL from existing tortious causes of action. A functional approach would respect CIL’s distinctive status. It would limit a tort claim to instances where a corporate actor that conducts business abroad behaves like a state vis-à-vis its interaction with host state populations.

Ahmad’s analysis of the pre-Nevsun understanding (including under the U.S. Alien Tort Statute) and the proposed way forward offers a sensible analysis in the wake of the Nevsun decision. I too have criticized the Nevsun decision in previous blog posts and a forthcoming article (watch this space!) although I propose a different way forward.

Companies play at April Fools’ Day

Was there a Volkswagen April Fools’ Day joke or wasn’t there? No one knows. Not even Volkswagen. Well, apparently they intended it as a joke but let media outlets treat it as authentic news. This in turn resulted in a spike in US share prices of the company (more accurately, its American Depository Receipts). After all this, they had to ‘clarify’ that it was just “a marketing campaign to draw attention — with a wink — to Volkswagen’s e-offensive and the market launch of ID.4 in the USA”. They also had to clarify that the campaign was not intended to move the share price. Oh and one more thing. The joke came two days in advance of April 1st.

The problem does not just seem to be one of joke delivery and possible share price manipulation. It also seems to have struck a nerve considering Volkswagon’s fraudulent emission tests scandal not too long ago. The FT reports about a tweet as evidence of the joke striking a nerve: “Voltswagen was the best April Fools’ prank since VW told us diesel was clean.”

Chris Bryant writes in his Bloomberg Opinion piece on the Volkswagen fiasco that this is “a reminder … that we now live in the meme-stock age where even bad jokes can add or subtract billions of dollars in market value. It’s a minefield for corporate executives to navigate”.

That is my cue to refer you to a new article by Sautter and Gramitto on the meme stock age, Corporate Governance Gaming.

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Not exactly a corporate April Fool’s day announcement but I think Monterey College of Law makes the cut for this post. It made the following announcement:

Monterey College of Law, a 501(c)3 California non-profit terrestrial corporation located in Seaside, California, has announced its intent to file for authorization from the State Bar of California to open its third branch campus – Lunar College of Law. The new lunar branch will join the law school’s two other branches, San Luis Obispo College of Law and Kern County College of Law offering a hybrid online JD degree that can be completed terrestrially or extra-terrestrially. The marketing of the program is proposed to begin April 1, 2021 and the first student cohort is proposed to start classes April 1, 2022. As the first accredited law school authorized on the lunar surface, the program will be subject to the 1967 Outer Space Treaty of the United Nations.

I initially missed the April 1 start dates for marketing and program start and merely thought of the announcement as a gimmick. Gimmickry in this area is after all not new since Musk announced that SpaceX will make its own laws in Mars a while back.

But the announcement helpfully concludes with: “While you are considering your options to become the foremost expert in Space Law, Monterey College of Law would love to wish you a happy April Fool’s Day.”

I hope someone at Volkswagen is taking notes.

“Work culture” in big and small firms – Some thoughts on the employee revolt at Goldman Sachs

By now we have all heard of the “revolt” or more properly put, grievances of Goldman Sachs’ junior employees that they were both over-worked and disrespected. Their complaints were not only about overwork but also about being “disrespected”. None of this sounds particularly new to me because I have worked and interacted with people who have worked in top law firms. Over at Money Stuff, Matt Levine (after remarking at their formatting skills!) linked this to similar complaints from employees at Apollo Global Management Inc. In response to both, Levine wonders that a softer, kinder wall street image was needed now to make up for the high end pay which could attract talent in the past. He also concedes that there could have been a generational change.  He says: “…today’s analysts will not put up with the old trade of personal life for money. (And will call attention to it on social media.)”

I would agree with both of Levine’s responses based on what I know about big law. On the first response, I will point out the law firm parallel that the work culture in big law was never a secret but they could (and still can) attracted talent because of the pay and also the brand/ training value (which goes to Levine’s half-joking point about perfectly formatted power points). I am definitely convinced about the latter part of Levine’s second response about employees today taking their social grievances to social media because I have seen this happen in other contexts (sexual harassment complaints, work culture complaints, etc) and have spoken about this in the context of stakeholder voice being amplified by social media. On the former point of his second response (employees will not trade personal life for money anymore), I would think that there was always a category of employees with these sort of priorities and those chose smaller law firms or their equivalent in other industries. In the investment banking space, Jeffries has apparently focused more on wellness issues in the aftermath of the pandemic. It is possible however, that there is a larger number of employees that have these priorities now than before and perhaps it will eventually lead to a tipping point when the top firms will be forced to improve their work culture. In the words of an unnamed “senior Goldmanite” (quoted in the FT), “there is less tolerance for abuse and more of a sense that when you experience abuse you should speak up”.

One additional point I want to tease out is that the Goldman employees’ complaint has two aspects – overwork and disrespect. While the points about prioritizing personal life over work life addresses the over-work issue, it does not address the issue of disrespect. Respect need not only mean comfortable work hours. It could also mean intellectual agency. Considering start-ups helps us tease out these two issues. Although employees are often under-paid and overworked in start-ups, in many cases, they choose to work there because they feel less like cogs in the system. For example, in Liftoff, Eric Berger, writing about SpaceX’ early days, says Musk “empowered his engineers”. He goes on to quote an early employee who says “a big thing was really having to learn to think, since nobody gave you a cookie-cutter job and told you what to do”. In other words, they aren’t learning to format power point the Goldman way (or conduct due diligence/ format contracts a certain way if you want the law firm equivalent).

Which is the fairest (class action) of them all?

How should a court respond to competing applications to stay one or more open class representative proceedings commenced in relation to the same controversy? (The controversy in question here is the fall in AMP’s share prices after its admissions in the Banking Royal Commission hearings regarding charging fees for no service and misleading ASIC about the extent of its misconduct.)

The majority decision in Wigmans v AMP Limited [2021] HCA 7 held (in the context of Pt 10 of the Civil Procedure Act 2005 (NSW)) that there was “no “one size fits all” approach” and that there was “no rule or presumption that the representative proceeding commenced first in time should prevail”. Significant for the litigation funding developments in Australia, they went on to hold as follows:

In matters involving competing open class representative proceedings with several firms of solicitors and different funding models, where the interests of the defendant are not differentially affected, it is necessary for the court to determine which proceeding going ahead would be in the best interests of group members. The factors that might be relevant cannot be exhaustively listed and will vary from case to case. (Emphasis mine.)

These factors (referred to as a multifactorial analysis by the lower court) are [60]:

[1] the competing funding proposals, costs estimates and net hypothetical return to members;
[2] the proposals for security;
[3] the nature and scope of the causes of action advanced (and relevant case theories); [4] … the size of the respective classes;
[5] the extent of any bookbuild;
[6] the experience of the legal practitioners (and funders, where applicable) and availability of resources;
[7] the state of progress of the proceedings; and,
[8] the conduct of the representative plaintiffs to date.

The majority decision justified the position as follows [84, 85]:

Unlike the United States and some Canadian provinces, which have adopted certification and carriage motion procedures to resolve multiplicity in class actions, Australian legislatures deliberately chose not to adopt such procedures. That choice reflected a view that the proposed class actions scheme was adequate to protect group members’ interests or, perhaps, competing class actions were not envisaged.

But the decision not to adopt the United States or Canadian procedures in Australia does not end, or dictate the outcome of, the process of identifying the relevant considerations for the Supreme Court in deciding which of the competing representative proceedings is to proceed. For as has been explained, the representative proceedings scheme in Pt 10 does not stand alone. It forms part of the CPA and it operates in conjunction with the CPA and the Supreme Court’s inherent powers. [Footnotes omitted.]

Interestingly, the minority interpreted the decision not to adopt the US or Canadian procedures differently. It held that since “the Parliament of New South Wales had before it the example of the legislative regime that operates in the United States to facilitate the determination by the courts of the competition between would-be sponsors of class actions, but did not adopt that example or any relevant aspect of it”, the multi-factorial test was not applicable [35]. Instead, the relevant principle to be applied was “the principle that it is prima facie vexatious to commence an action if an action is already pending in respect of the same controversy in which the same relief is available” [43].

This decision (both majority and minority opinions), is significant in light of the Report of the Parliamentary Joint Committee on Corporations and Financial Services on Litigation Funding and Regulation of the Class Action Industry wherein this issue was discussed (and the Wigmans case was referred to). The committee expressed the view that “the most appropriate approach would be a requirement for the Federal Court to select the class action which advances the claims and interests of class members in an efficient and cost-effective manner, with regard to the stated preferences of the class members” and also a desire to curb the race to the court mentality of plaintiff’s lawyers. Recommendations 2 and 3 of the report deal with this. I have extracted Recommendation 3 below:

Recommendation 3
7.76 The committee recommends the Federal Court of Australia’s Class Actions Practice Note be amended to include:
 a requirement that the Federal Court of Australia holds a selection hearing to determine which of the competing or multiple class actions should proceed, the Federal Court of Australia should select a class action which advances the claims and interests of class members in an efficient and cost-effective manner, with regard to the stated preferences of the class members; and
 a requirement that on the filing of a class action, the Federal Court of Australia orders a standstill in that proceeding for 90 days, so that any other competing or multiple class actions can be appropriately considered and filed, and that any book building that occurs during the standstill period should be given no weight by the Federal Court of Australia.

So, while the majority decision seems to be taking the direction of the committee’s recommendations, the minority decision is more convincing based on the current law. In any case, reforms on the issue need to be introduced at the earliest to provide certainty.

Are corporate disclosures the best tool for handling climate issues?

The SEC has indicated that it is looking to introduce corporate disclosure requirements regarding climate change impacts. Will this help address the problem of climate risks or will it simply impose costs on companies? In short, I would say it is the latter. Disclosure is an important corporate governance tool but its use in the climate risks context may be misplaced.

Why climate disclosures will not work

One of the reasons climate risks have not been priced into the global capital markets is, according to Madison connor (in an article and also a short blog post), “shareholders and analysts currently lack the fine-grained asset level data they need in order to make climate-risk assessments”. What are these fine-grained asset level data?

Where corporate operations are located, the origins and routes of their supply chains, the sources and quantities of inputs like water and energy – this is the type of information needed to assess climate risk exposure but not currently disclosed in financial reports. Often, the information that is voluntarily disclosed aggregates data at too high a level, is given at widely varying time-scales that make comparison difficult, and fails to differentiate well between exposure and liability.

This general idea is echoed by Bernard Sharfman in twitter post saying that “shareholder proposals on climate change are de minimis and probably do more harm than good…it wastes a lot of time, energy, and resources of both m[ana]g[emen]t and activists”.

Madison Connor ultimately concludes by favouring direct regulation in this context. She writes:

No amount of disclosure, however, can protect the market from climate change. The only path toward financial stability requires halting emissions. Direct regulation will be required to address not just mitigation deficits, but physical risks and adaptation deficits as well. Beyond the “market failure” of emissions externalities, there is a limit to what increased disclosure can facilitate in the face of systemic risks; climate risks remain unhedgeable even with increased information.

Warren Buffet’s Berkshire Hathaway was recently reported to have rejected shareholder proposals for climate disclosure. The company’s reasoning was that “a formal annual assessment of how it manages climate-related risks” was not necessary because the board already received regular reports on the matter. It further noted that many of Berkshire’s subsidiaries were already making sound climate-related decisions. While companies may be loath to incur costs, such a stance is ultimately more appreciable than time and resources being dedicated to check the box disclosures.

I think this is a good place to plug professor Earnest Lim’s book Sustainability and Corporate Mechanisms in Asia which I have not yet read but have attended his talk introducing the book where he expressed a good deal of skepticism about the quality of climate disclosures and whether they are adequately audited.

Where do disclosure requirements work well?

I want to be clear that what I say above does not mean that I am averse to corporate disclosure requirements overall. Disclosure is a tool that can work well in situations where we want companies to focus on a certain issue and allow flexibility in terms of how each company responds to the issue. Ideally the disclosure requirements will not only allow stakeholders to pay attention to and respond to the company’s efforts but is also broad enough to allow companies to use innovative programs to improve performance on that issue. Diversity (on the board and other levels of the company) might be one such issue where disclosures work well although not all disclosure regimes allow for a desirable level of flexibility. Unlike climate change issues, diversity does not require investors and other stakeholders to have the level of data and sophistication to make assessments about diversity issues. However, even in the diversity context, the focus invariably is on the percentage of women (rather than on other types of diversity) on the board (rather than in other levels of the company) thus becoming too simplistic. Ultimately, disclosure is not a perfect tool but a useful one in some contexts but not in others.

Mentorship – An important aspect of the corporate diversity project

So it’s that day of the year when we are finally allowed to celebrate women. Today, I’m celebrating all those (irrespective of gender) who have been mentors, allies, and friends in my journey! As someone researching and writing on corporate diversity, I also think that diverse members (in terms of gender, race, or any other attribute) would have found support from a range of different people along their journey. Similarly, they would have faced a range of different people that are part of the problem. On that note, I want to highlight an interesting article (working paper available here) by Schipani, Dworkin, and Abney. The article is titled “Overcoming Gender Discrimination in Business: Reconsidering Mentoring in the Post #Me-Too and Covid-19 Eras“.

Almost at the outset, the article notes:

…the dividing line between the genders in the workplace may be at its largest in the post-#MeToo era,
as studies indicate that a deep paranoia of women by men is permeating the corporate workplace.
As a result, women, who were already at a significant disadvantage in corporate America, face
increased exclusion by men in and outside the workplace. Worse yet, the harsh reaction to the
movement may have caused men to become more skeptical of sexual harassment claims.

(Footnotes omitted.)

This is a significant problem because setting up women and men against each other can be counter-productive. Many of my mentors and allies have been men and I hope such mentorship and ally-ship across genders can continue. The authors of the article also note that male mentors to women are important; but their focus is on a different issue that is less obvious – providing opportunities for women to mentor men. One of the reasons women mentoring men is probably not as common is because, as the authors note, “men continue to be overrepresented in senior level positions”. Noting that “women and men may demonstrate an ingroup bias toward their own gender”, the authors propose that fostering cooperative interaction between genders would counter the implicit bias. A practical way to achieve this, they suggest, is to have women mentors for men.

I also really like a point in the article about diversity training not being the panacea that everyone assumes it is. The authors say that while such training programs often elicit negative reactions from men, the mentoring relationship would avoid this shortfall. Further, the note that “the mentoring relationship could also help junior men gain an appreciation for the very attributes for which women have been stereotyped”. I think these points are great although not without some issues (further overburdening women) which are also discussed in the article. The article also provides an excellent discussion on mentorship itself – the various levels at which mentorship is useful, what it entails, its benefits that go beyond simply benefitting the mentor and the mentee, etc.

I’ll conclude with some news. I have a book on corporate diversity (titled The Corporate Diversity Jigsaw) in the works so watch this space for updates!

(P.S. The article also contains some amazing gems like this: “…elementary school children may learn about the tactical “brilliance” of Napoleon but not the aggressive assistance he received throughout his career from married “courtesan” Josephine Bonaparte, of Tchaikovsky but not of the financial investments provided by his “muse” Nadezhda von Meck…”.)

How effective are chief diversity officers?

A study in the university context found that executive level diversity officers or chief diversity officers (CDO) did not have a significant impact on the hiring of diverse faculty. This is interesting since, as the authors of the study say, the hiring of such a CDO often signifies the university’s commitment to diversity. The study is quantitative and does not explain why CDOs are unable to have an impact although it says at the outset that “in a university with shared governance, it is not immediately clear how much influence an executive level CDO can exert upon faculty hiring decisions made by individual departments”.

The study is also interesting for people interested in diversity in the corporate space because it has become common for large companies to hire CDOs. In an FT article that was published about a month ago, some CDOs (in the corporate sector) have been quoted as saying that the lack of resources available to them is often the greatest impediment for them. One CDO has cited two important resources namely a direct reporting line to the CEO and access to human resources data. Both these issues, particularly the former, speak to the basic issue of whether the company management is genuinely interested in diversity or is merely signaling interest by hiring a CEO. On the same lines, another CDO cited in the same FT article says that CDOs are in danger of simply becoming event planners.

While the big issue is clearly the need for organizations to genuinely want to focus on diversity (as against simply signal such commitment) there are also other finer details that might need to be looked into in terms of strategies used by CDOs. I’ll make two quick points on this here. First, the strategies should speak to inclusion rather than just on numerical targets. Second, the strategies should go beyond merely planning diversity training workshops (often mandatory) which are not always effective unless accompanied by structural changes in the organization.