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Ensuring good corporate stewardship
THE United Nations (UN) 2030 Sustainability Development Goals (SDGs) were formulated with the aim of bettering the human condition. In a nutshell, they aim to eradicate poverty, achieve gender equality, protect the planet, and promote sustainable development.
In this article, I shall discuss how three key stewardship principles can help corporations and countries contribute to the 17 SDGs.
There are two aspects to corporate stewardship: firstly, a company's assets are looked after with considerations beyond one's self; and secondly, company decisions are made with long-term considerations in mind.
An example of stewardship in action is Unilever CEO Paul Polman's decision to do away with quarterly reporting to avoid short-termism.
THE THREE KEY STEWARDSHIP PRINCIPLES
In their book Inspiring Stewardship, Professor Didier Cossin, director of the IMD Global Board Centre in Switzerland, and Ong Boon Hwee, CEO of the Stewardship Asia Centre in Singapore, identified three key principles that underpin successful stewardship: leading with impact; safeguarding the future of the institution; and delivering meaningful benefits to society.
They opine that if corporations incorporate these principles into their operational strategy, countries will be in a much better position to achieve the goals as set out in the UN SDGs.
1. Leading with impact
The first principle deals with the impact a leader can have on how deeply and widely sustainability efforts are adopted by an organisation.
Decisions taken by the leader arise from his deep personal convictions on the direction the company should go. At times, this leader will have to make decisions that are unpopular with shareholders, or even the board if he or she wishes to go down the path of sustainability.
According to Prof Crossin and Mr Ong, this style of leadership is transformational - such a leader is able to engage emotionally with employees. He also places a high level of trust in them while imparting a long-term view across the organisation.
City Developments' (CDL) Kwek Leng Joo was such a leader. Before he passed away in 2015 at the age of 62, he was well-known for being a pioneer in sustainability in the property development business.
In the 1980s and 1990s, before sustainability became part of corporate ethos, he advocated corporate social responsibility sustainability. Under his leadership, CDL adopted the ethos of "conserve as we construct". By 2015, CDL owned the highest percentage of the 2,500 Green Mark buildings in Singapore.
2. Safeguarding the future of the institution
This second principle deals with the need to make employees engaged with the idea of sustainability. While the vision and idea for sustainability can originate at the top, successful implementation of this strategy can only take root with the cooperation and buy-in of the employees of an organisation.
This can be achieved in a few ways, for instance, by giving employees a sense of belonging with their organisation. In this way, they would be able to cultivate a long-term relationship with the organisation that is based on trust. In turn, they would be more willing to commit to sustainability efforts.
Singtel, for instance, keeps its employees engaged through a few initiatives. Singtel has a talent review process, which focuses on identifying employees' talents early in their career so that their development and progression can be accelerated. For staff over 50, Singtel has "Re-employment: Equipping and Developing Yourself" and "Rethink 50: Preparing for Change" programmes. Such programmes prepare older talent in Singtel to cope with possible life changes and career transitions and encourage older employees to continue working beyond retirement age.
Singtel also has policies governing multiculturalism, which is appropriate in a multicultural society like Singapore.
The "Singtel Code of Conduct" governs how employees should conduct themselves in a multicultural environment. The Code specifies treating fellow colleagues with respect and consideration at all times, regardless of gender, age, ethnicity, language, cultural background, physical ability, religious belief and lifestyle choices. Singtel's initiatives go towards the SDG of Reduced Inequalities.
3. Delivering meaningful benefits to society
Organisational goals should centre on "value creation". This organisational aim goes beyond creating mere monetary profit. Prof Crossin and Mr Ong argue that the concept of "value creation" deals with the actual products organisations produce - are they innovative? Are they produced and delivered on time to clients?
If "value creation" can be balanced with the idea of "value appropriation" or "profits", companies would go a long way towards achieving the SDGs.
Take for example DBS Bank, which seeks to conduct its banking business in a fair and responsible manner by ensuring it only offers products and services that are suitable for their customers.
It calls this "fair dealing". By publicly stating this, DBS Bank has expressed that it is important that the bank products it recommends are based on clients' needs, and not whether that particular product makes the highest profit for the bank.
In conclusion, corporations which are guided by the three stewardship principles ensure their own sustainability in today's volatile, uncertain, complex and ambiguous environment. From a global and humanitarian perspective, businesses that operate by stewardship principles contribute to the universal goal of bettering the human condition.
- The writer is chief executive officer of the Institute of Singapore Chartered Accountants (ISCA).