The World Economic Forum in Davos just completed their winter conference. One hundred leading businesses signed a compact as a framework for the role of their business in society. The Forum’s International Business Council will now work on a way to measure long term progress.
I’m greatly encouraged about the positive vision these companies are embracing for the future. CEOs are investing in meaningful ways to not have government be the answer to some of our greatest challenges. Instead, business must take the lead in partnership with many stakeholders, including government. I believe it’s the only way we can adapt to the dramatic changes ahead.
One quick illustration. McKinsey & Company had a great concern with youth unemployment. They began a work called “Generation,” making a $75 million philanthropic commitment to help get unemployed youth into jobs. They are working across five countries, providing youth training – 10,000 now have jobs. They developed a successful methodology, and corporations are partnering with them. Their goal is to train one million youth to get jobs!
As the CEO of Philips said, “We need a True North - a mind set shift.” It’s all about leadership and leaders being responsive to all of their stakeholders. It’s about investing in a long term future and not being seduced by short termism.
So please reflect on the Compact below. Would you sign it? If not, why? Perhaps you know if you did sign, there is no way you could get your board’s support? I want to hear your voice! If you would sign it, what do you especially like? Should anything be added or modified? I plan to collect your comments and publish them in a future blog post. We as leaders can learn together. If you want your name deleted from your comment, I will do so.
Thanks So Much for Your Thoughtful Engagement - Doug
The Compact for Responsive and Responsible Leadership
A Roadmap for Sustainable Long-Term Growth and Opportunity
Corporations and investors are powerful actors in society. As such, their responsive and responsible leadership can significantly improve the state of the world. There is emerging consensus on the need for a new Compact for corporations, their chief executive officers and boards of directors, as well as leading investors and asset managers to create a corporate governance framework with a focus on the long-term sustainability of corporations and the long-term goals of society.
I, the undersigned, share the conviction that:
- Society is best served by corporations that have aligned their goals to serve the long-term goals of society.
- Short-term financial gains should not distract from the corporate and societal goals of long-term economic prosperity and social welfare.
- There is a need for a Compact that recalibrates the relationship between public corporations and their major investors, and conceives of corporate governance as a collaboration among corporations, shareholders and other stakeholders working together to achieve long-term value and resist short-termism.
- Disagreement between stakeholders is best resolved in a transparent and respectful manner, de-escalating conflictual stances wherever possible.
As a responsive and responsible leader I, the undersigned, commit to acting within the remit of my responsibilities, duties and influence to:
- Ensure the board oversees the definition and implementation of corporate strategies that pursue sustainable long-term value creation.
- Encourage periodic review of corporate governance, long-term objectives and strategies at the board level as well as clear communication between corporations, investors and other stakeholders about the outcomes.
- Promote meaningful engagement between the board, investors and other stakeholders that builds mutual trust and effective stewardship, and promotes the highest possible standards of corporate conduct.
- Publicly support the adoption of the Compact and implement policies and practices within my organization that drive transformation towards the adherence to long-term strategies and sustainable growth for the benefit of all stakeholders.