Boards and the executives and advisors they hire need to be proficient in Purpose Governance, which will put their organizations on a viable path that creates value for the company and the society on which it depends.
Purpose is gaining ground on profit generation, as the reason companies exist. Social purpose in business has become a global business trend.
Questions abound regarding this new reality: How do boards ensure their corporate purpose is future-fit? How do they provide oversight of their corporate purpose? How do directors ensure the purpose is driving corporate strategy and culture; and how do they know if the purpose is effectively and authentically implemented? What is driving the corporate purpose trend and why?
Answers to these questions are all found in this report I authored for Governance Professionals of Canada (GPC), based on the first national discussion on this topic at their 2020 national corporate governance summit.
In these times, to be effective stewards of their organizations, boards and their governance advisors need to be clear on what it means to have a corporate purpose. Overseeing the corporate purpose is the board’s pre-eminent role, the directors of which need to be engaged in defining why an organization exists and ensuring the purpose is implemented.
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There is no doubt that Purpose Governance is rapidly rising as a focus for boards and executives, driven by COVID-19 and other issues — such as systemic racism and pervasive inequality. The GPC report explores how:
“Profit purpose” is on the wane, while “social purpose” is on the rise.
Social purpose reflects an evolution from corporate social responsibility approaches that address risks, to an approach of having a social purpose as the societal reason a company exists.
Once a board adopts or affirms the corporate purpose, it needs to ensure that it is embedded in the corporate strategy and culture, and in the overall governance mandate; this requires updating governance documents.
Governance professionals have a central role to play in raising Purpose Governance with boards and executives, and in ensuring leaders are kept abreast of emerging governance best practices.
Boards set the tone at the top for delivering on the purpose — and need values, guardrails and a decision-lens to ensure it is executed properly.
There is no time to waste. Boards and the executives and advisors they hire need to be proficient in Purpose Governance, which will put their organizations on a viable path that creates value for the company and the society on which it depends.