Zeitgeist

Zeitgeist  (1) :   The Age of Responsibility

Has Corporate Governance entered a New Era?

Are Companies and their Boards able and willing to enter a new era of responsibility and keep up with the Spirit of the Times?  

Corporate Governance is often considered to be the territory of Directors, and it should be focused on the business of the company. To a certain extend this is true as the Directors have a duty to look after the interest of the company… and its stakeholders! And that is where matters get increasingly complicated for the Board. 

With the emerging integration of ESG (2) criteria on the screens and reports of Market Analysts and Fund Managers, the scope of the Board seems to be growing faster that their capability and capacity to integrate these fundamental elements in their policies and strategies.

But Investors, on the whole, being still rather traditional in their approach, Boards should have a little time to gear themselves up, or do they?

Investors do represent an important stakeholder for Boards and their Directors, but they are not the only one, not anymore. The other stakeholders may be far less patient. Local communities, Customers, Activists and other opinion leaders have access to a lot more information and, are able to use this information in a way that can be disruptive for the organizations when they fall short of public expectations.

The definition of responsibility has also changed; being compliant is just not good enough; being compliant is expected: it is basic hygiene! Responsibility is also not just about the environment and society, and the impact (positive and negative) that a company may have, in other words external visible aspects. Responsibility is also about internal, traditionally less visible, aspects of a company’s affairs, such as the remuneration of its executives and Board members, their behaviour, their ethics, etc…

As the Spirit of the Times is moving toward Responsibility, Accountability and Transparency, it is high time for Boards to think about their role differently, and start developing new capabilities to integrate Sustainability in everything they do by developing Corporate Sustainability Governance practices, before they are forced to.

Note 1   Zeitgeist: “the spirit of the times” or “the spirit of the age.”  

Zeitgeist is the general cultural, intellectual, ethical, spiritual, and/or political climate within a nation or even specific groups, along with the general ambiance, morals, socio-cultural direction, and mood associated with an era. (Wikipedia)

 Note 2    ESG:  Environmental Social Governance