The annual global survey from consultancy Black Sun released during a recent joint conference of the International Corporate Governance Network and the International Integrated Reporting Council indicate that ‘there is strong indication from executives that attitudes concerning business and stakeholder value creation need to change and that organizations must deliver a purpose beyond profit”. It also states that “shareholder returns will, as expected, remain crucial for business, but other factors, such as meeting customer expectations and inspiring and engaging people, will significantly grow in importance. Working for the longer-term is cited as preferable over the short-term, and doing this is thought to bring significant internal and external benefits”.
It is a world moving away from narrow measures. Mervyn King made it clear in opening session that the traditional financial measures were not up to scratch. For him the importance was that the corporate world should move from “the plague of short-term profits to value-creation in a long-term manner”. And, for most people at the conference, this meant properly run companies using the wider models of integrated reporting.
A polling on which corporate governance issue was the most important one to concentrate upon demonstrated that there was a disconnect between what was actually happening and what it was felt ought to happen. Recent government pronouncements have focused on pay and incentives and the composition of corporate boards, yet these issues attracted just 9% and 5% of the vote. The overwhelming favourite, coming in at 68%, was for getting boards to focus on long-term value and the significance of stakeholder interests.
Read the entire column on our Global IAS Plus site.