“Just as the very purpose of organisations is being questioned today and organisations try to become clearer about what they stand for, what role can boards play in strengthening the perceived legitimacy of the business? How should social licence and considerations about implied corporate values shape board decisions?”
Dr.Meena Thuraisingham, Author of “Identity, Power and Influence in the boardroom” (Routledge, 2019)
Questions about social licence are, at their core, questions about the purpose of the company – the enduring statement of why a business exists. Seen in this way a clear statement of purpose should anchor all decisions, in particular strategic decisions…giving a meaning to everything the company does. While the focus on shareholder value has the benefit of specificity, it is an incomplete statement of legitimacy, let alone success.
Boards can and must govern, indeed lead, by embracing a wider range of issues than they have done in the past. Disregard or disrespect of the trust communities place in companies that are designed to serve them is more likely to destroy shareholder wealth not preserve or create it. There are many notable examples of this. Such disregard will also encourage greater governance and regulatory scrutiny and intervention.
Despite this, how much board time is allocated to such issues? Nowhere near enough.
Read our paper on the growing importance of corporate purpose from guest author Dr. Meena Thuraisingham here: ‘Governing through corporate purpose’.