In any corporation, the pinnacle of leadership is in the boardroom. This is because boards decide on the allocation of resources. Board members decide where and how money should be spent, i.e., which programs are to be supported, which programs are abandoned, and which departments or management teams be given the bonus or the sack.
Because they are the pinnacle of decision-making, boardrooms are also the place where politics (corporate politics) are in overdrive. Welcome to the world of corporate life, where personal interests, biases, and partisanship against common enemies in the organization drive decisions.
The 2020 pandemic brought with it a surge of online and digital technologies that have rendered some businesses obsolete or unable to survive. Board members must be willing to rise to these challenges and ensure that their corporate decision-making can and must be both profitable and sustainable, socially and environmentally. Companies that ignore social or environmental issues do so at their own peril because these challenges can and will come back to haunt them.
Currently, many governance issues have been addressed because the standards have been enforceable by prevailing laws. Social issues, such as human trafficking, illegal labor hiring, or employee abuse, are slowly gaining traction and are being highlighted by laws. Products manufactured in illegal labour conditions will be stopped at various borders due to the realization by many governments that they, too, will be held accountable and cannot be seen to encourage abusive practices.
Environmental laws within the accounting rules are now being pushed, and we will likely see some form of enforcement on companies that breach the environmental accounting standards. While environmental issues are currently subject to some fines, introducing the enforceable accounting rules will force many companies to change their way of doing business. They will have to be prepared for some assets to be considered “stranded assets” and to face increasing insurance premiums due to their existing business models and, sometimes, even where their businesses are located, as climate change is impacting coastlines, water levels, and thus, the risk levels in so many ways.
Far from being anti-business, I firmly believe that recognizing that everyone holds a stake in the activities and consequences of global business it forces us to consider the big picture and the full timeline. Sustainable practices – while requiring more patience and upfront costs – promise longer-term stability of profits and mutually beneficial relationships with consumers, partners and communities.
As corporate leaders in the boardroom, we can enrich ourselves and our communities. As a board of directors, I argue it is better to lead the charge towards profitable sustainability than be dragged.
As mentioned above, the boardroom represents the highest tier of decision-making. At this level, the potential for change – both positive and negative – is profound and far-reaching. All board members’ goals are to navigate the boardroom politics, preserve the culture, and focus on sustainability with profitability.
About The Author
Shireen Muhiudeen’s career spans over 30 years in the financial services and corporate sectors, with a strong track record in Emerging Asia Equity Markets. She was the founder, managing director and principal fund manager of Corston-Smith Asset Management. This independent asset management company was an early signatory to the United Nations Principles for Responsible Investment (“UNPRI”), a position she held from 2004 to 2019. Prior to that, Datuk Shireen was the CEO of AIG Investment Corporation (Malaysia). Review her book on Amazon today.
A strong advocate of Corporate Governance best practices and Environment, Social and Governance (“ESG”) activism, Datuk Shireen has served on several Boards and Board Committees in public-listed companies including as Non-Executive Chairman of Bursa Malaysia. In recognition of her work in the industry, she was named one of the 25 most influential women in the Asia-Pacific region for asset management by Asian Investor, a regional publication, in June 2011. In March 2014, she was honoured by Forbes Asia as one of the 50 Asia’s Power Businesswomen 2014.
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