Opening Address by Guest-of-Honour
Launch of Corporate Governance Week 2021
Sustainability and Resilience
Panel Discussion 1: Sustainability Governance: The Next Step of Corporate Governance Framework?
At the end of 2020, the European Commission launched a public consultation on putting Sustainability at the heart of the corporate governance framework for EU companies. The Commission believes that embedding sustainability in the corporate governance framework will contribute to the COVID-19 recovery and to the long-term resilience and development of companies. This reflects the view expressed in the European Green Deal that “sustainability should be further embedded into the corporate governance framework, as many companies still focus too much on short-term financial performance compared to their long-term development and sustainability aspects.”
So why is the EU considering these changes? Fundamental to thinking is the finding of a study on directors’ duties and sustainable corporate governance published in July 2020. It reported that there was a trend for publicly listed companies within the EU to focus on short-term benefits of shareholders rather than on the long-term interests of the company. It recommended that an EU policy intervention was required to lengthen the time horizon in corporate decision-making and promote a corporate governance framework that was more conducive to sustainability.
In addition, a study on due diligence requirements through the supply chain published in January 2020, reviewed due diligence processes designed to address adverse sustainability impacts, such as climate change, environmental and human rights issues. The study concluded that only one in three businesses taking part in the underlying survey claimed to undertake due diligence which took into account all human rights and environmental impacts. This thinking is not just confined to EU companies and can be found in Asian companies too.
What does it mean for companies operating outside the EU? How will companies with dual listing cope with these new changes? How would these changes affect companies that have operations in EU? How would Asian supplier be affected? What would institutional investors be demanding of their investee companies? How would this change the corporate governance landscape moving forward?
Presentation 2: What Constitutes an Enduring and Resilient Company in the 21st Century?
Many of the challenges that corporations and their boards encountered in 2020 will continue to be front and centre in 2021, including the COVID-19 pandemic. Trends like the movement to address racial injustice and broad-based socioeconomic inequality, an accelerating sense of urgency around climate change, technological innovation and an evolving political and regulatory climate. These trends have underscored the key themes of sustainability, resilience and corporate purpose, and are prompting new perspectives on the ways that corporations must operate to manage the multiple stakeholder interests that are critical to the health and long-term success of their businesses. And, in this environment, boards are seeking to optimize their functioning and leadership role to navigate these challenges as well as the evolving expectations of stakeholders. What should boards do in this “new normal”? We explore the fundamentals of what makes an enduring corporation in the 21st century like corporate purpose, culture and strategy.
Boards across all sectors today face a growing drumbeat of calls from multiple stakeholders including customers, employees and suppliers for a clearer explanation of their organisational purpose. Recent calls for better articulation of purpose from global investment management firms together with specific commitments on purpose by asset owners, are accelerating this momentum and elevating it to a critical board issue. To deliver value for different stakeholders, purpose has to be more than a marketing slogan or a vague set of values that one incorporates into the annual report. It has to become an organising principle, the reason why an organisation exists. How can companies enact purpose in a modern organisation? What specific actions should boards take?
Panel Discussion 2: What Constitutes an Enduring and Resilient Company in the 21st Century?