Tuesday, April 23, 2019
08

Corporate Governance Excellence is the Key to Promote Sustainable Development

 

The Institute of Directors, India hosted the 16th London Global Convention on “Corporate Governance Sustainability Global Business Meet “between 17th and 20th October, 2016 .The theme of the summit was “Board’s Evolving Role in an Uncertain Global Economy”

Dr. R. Seetharaman, Group CEO, Doha Bank gave a special address at this summit on 18th October 2016. He said “ Global growth is projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017.A more subdued outlook for advanced economies following the June U.K. vote in favor of leaving the European Union and weaker-than-expected growth in the United States. The Global Governance gives focus on global economic growth and financial stability. It also gives emphasis on attaining inclusive growth through digitization and through women empowerment. Economies, institutions and individuals need to follow governance. It can be called corporate governance for institutions, and global governance for economies. Individuals are affected by corporate governance and global governance due to the links with institutions and economies, respectively. Institutions cannot afford to ignore the long-term, and focus only on the short term, as the long term is achievable only when it is sustainable. Today Sustainable growth remains a challenge for economies and for corporates as well. Corporate structure and culture should focus on linking performance objectives and combining performance measures, and should have a consistent design and implementation across organisations.Improved oversight over board compositions, improved disclosure and transparency, and the effective use of audit functions are key areas which require focus. Boards are increasingly considering sustainable development issues at the committee level. Corporate Governance excellence contributes to sustainable development.”


Dr. R. Seetharaman also participated in the session “Changing Role of the Boards – Global Trends “on 18th October 2016. He said “Diversity on corporate boards is associated with more effective corporate governance and improved financial value. Board diversity, which includes not only gender diversity, becomes really important in ensuring the Board is fit to drive change towards a sustainable business. Solving sustainability problems requires working across functions and this can happen if the senior team has collaborative leadership styles. Board should recognise the importance of staff, customers, communities or risks associated with the limitations of natural resources. An understanding of these issues on the business model, long term success and ability to deliver on strategy are critical.”

Dr. R. Seetharaman highlighted the current trends in corporate Governance in recent years. He said “The fines, penalties and settlements face by global financial institutions recently have re- emphasised the importance of Corporate Governance. UK came with stewardship code in 2010. Its principal aim is to make institutional investors, who manage other people’s money, be active and engage in corporate governance in the interests of their beneficiaries. Risk management, Remuneration and Incentive Systems, Board Skill’s and independence and Shareholder engagement are the key areas which needs focus. The functions of Chief Executive Officer and Chair of the Board of Directors are separated. Shareholders have should be proactive. Institutional investors should be encouraged from acting together in individual shareholders meeting provided that they do not intend to obtain the control of the company. The role of independent directors has evolved with changing regulations to being a sounding board for compliance and a governance watchdog. Being a non-executive director, an independent director may have limited information visibility. However, he/she is expected to have oversight of innumerable aspects including strategy, financial reporting, governance, risk management, regulatory compliance and growth prospects, among others. Economy, regulations and cybersecurity are top issues for directors. Hence relevant knowledge need to be acquired by non- executive directors as well. ”

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