For whom shall boards govern?

IT IS hard to debunk the thinking that boards of directors should, first and foremost, serve the interests of shareholders; after all, it is from shareholders that boards receive their mandates. Indeed, this is the economic-legal model of business that has prevailed for a long time.

Yet, the clarion call for boards to cater to a broader range of stakeholders cannot be ignored. In particular, good practices in corporate governance now require companies to engage stakeholders such as employees, customers, suppliers, creditors, and the community at large.

The importance of the role of stakeholders has been spelled out in global codes, particularly the G20/OECD Principles of Corporate Governance. This set of principles has also become the basis for the Asean Corporate Governance Scorecard, an assessment framework for the larger listed companies in six Asean countries (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam).