The findings reinforce the benefit diverse attitudes and values as well as experience can bring to boards. They also raise the question about the commitment, pace and breadth of multi-dimensional change required by boards to shape the future.
We are about to embark on far-ranging changes to how society, government and private enterprise collaborate. No one individual, organisation or state can do this alone.
The board of the French conglomerate Danone, enabled by legislative changes, recently created a new stakeholder capitalist resolution and shareholders voted to legally embed environmental, social and governance goals in the company’s bylaws. Last year Capita elected two employees to the board to bring an employee perspective and increase diversity of thought.
The challenge for boards should not be how long change should take, but how boardrooms collaborate more effectively to bring together new skills, ways of thinking and working to speed up change.
Only 9pc of FTSE All-World companies currently link executive pay to environmental, social, and governance criteria, according to Sustainalytics.
The majority of board members surveyed felt new definitions and clear criteria are essential and could be embedded into existing remuneration policies to reward the creation of stakeholder value.
The stakeholder appetite for change is already there and growing. To effectively support and guide their organisation’s transition into a new economic model, boards need to be more in sync with this movement. How businesses work together with governments and civil society for the common good is critical if the shift to stakeholder capitalism is to be accelerated.
Now the challenge is for boards to step forward to support management to ensure that employees, customers, suppliers and communities are protected as much as profits; greater priority is given to more equitable wealth distribution; and to ensure their organisation’s environmental impact is embedded in its valuation. Responsible capitalism isn’t just a long-term ambition. It’s a necessity for today.
The coronavirus crisis has placed companies’ social contracts far higher up the agenda in the boardroom. The transition is here and happening at speed, and it’s not just Larry Fink who thinks so. And it can’t take 10 years.
Helena Wayth is chief executive of A Bird’s Eye View