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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Over the past decade, boards have been asked to adopt first CSR
Governance,
then ESG
Governance
and now Purpose
Governance.
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.
Published Dec 23, 2020 7am EST / 4am PST / 12pm GMT / 1pm CET