(Re)Discovering Stewardship – What It Means for the Future of Business
On 4 June 2019, 200 business leaders from 135 organisations came to discover the future of business with stewardship. With 45 percent new attendees this year, the topic of stewardship continues to gain traction among business leaders and organisations. They came from over 20 countries across Asia and beyond to learn about re-discovering stewardship and what it means for business tomorrow.
Evolution of the business landscape and societal issues
The business landscape is undergoing rapid change. Mr Lim Boon Heng, Chairman, Temasek Holdings, highlighted the speed of developments in technology and global events that impact businesses and societies. Industry 4.0 capabilities like automation, Artificial Intelligence (A.I.) and data analytics are disrupting entire industries. The impact is further magnified within communities and individuals. As technologies reshape jobs, the issues of re-skilling and up-skilling become top of mind.
Amid these changes, trust remains a constant and business leadership has become more important than ever. Businesses must acknowledge that they operate within societies and act responsibly in the face of this challenging climate.
“The obligation of businesses is not just to cut costs but to find ways to transition those who are impacted into meaningful roles,” he said. “Being a steward means working collectively with other businesses, labour organisations, civil society groups, and employees, to equip communities for big changes. Leaving people behind is not an option.”
What corporate stewardship means today
What does stewardship mean in this complex business landscape? Mr Ong Boon Hwee, CEO, Stewardship Asia Centre, tackled this multi-faceted topic in the next session. He said “stewardship means different things to different people,” like the story of the seven blind men describing the elephant differently though referring to the same beast. Different individuals and organisations have their own interpretations of what stewardship is.
Stewardship Asia Centre defines corporate stewardship as the responsible and wholehearted management of entrusted assets so as to pass them on in better condition. Businesses must keep in mind:
- Responsible wealth creation – How a business succeeds and grows over the long term, enhancing wealth for its stakeholders and the well-being of the society in which it operates.
- Ownership and trusteeship – Those who are entrusted with assets and responsibilities have the motivation and obligation to hand them on, in due course, in better shape.
The thought leadership centre bases stewardship on five key concepts:
- Long-term view
In addition, businesses must recognise that there are three critical elements to consider in their stewardship journey:
- The will to act
- Interdependence between multiple stakeholders, which include the societies and communities they interact with
- Time connectivity to ensure relevance across generations
Judge Professor Mervyn E. King, Chair Emeritus, International Integrated Reporting Council (IIRC), discussed the role of stewardship in the next session. Stewardship is an ethic that embodies the responsible planning and management of resources. Hence, the conduct of the corporation through its leaders is of utmost importance.
“The most important steward is the board. The board is the steward of an incapacitated, inanimate, artificial entity called “the company”, which has no heart, mind, soul or conscience. The conscience of companies is the conscience of its leaders,” he said.
He also challenged the audience to rethink the prevailing myth that the shareholder is the most important stakeholder. While they have a stake in the company, shareholders ultimately have no rights to possess, manage and use the income of the company’s assets. They have little to no duty or responsibility to the company. Hence, the board is the most important and corporate social responsibility should be built into the business model—not on top of it.
Due to this “profit-only” mindset, the 20th century was marked by unsustainable development and “ecological overshoot”. In the 1980s, there was a shift in value from tangible to intangible assets. Asset owners have come to realise that the world is facing decreasing natural assets and that they must create more products with fewer resources.
The most sustainable way forward is to change business attitudes. Organisations must go beyond financial reporting and adopt an attitude of radical transparency. Directors, being the heart, mind and soul of the company need to be bold and steer their companies with four main principles in mind:
- Value creation
- Good governance
- Intellectual honesty
“They must act for the long-term health of the company, not the short-term wealth of shareholders,” he summarised.
Solving everyday problems as business purpose
Ms Tan Hooi Ling, Co-founder, Grab, spoke next on how companies can play a vital role in solving everyday problems in society. She emphasised that the Southeast Asian region is on an exciting cusp of pivotal change. The digital economy is growing, with new possibilities and services driven by an exponential increase in Internet users.
Digital transformation in the region presents unique opportunities to solve issues. For instance, massive traffic congestion in cities is estimated to cost countries three to four percent losses in GDP. Meanwhile, physically printing cash to supply the economy with money also leads to unnecessary costs.
Given this situation, her company’s mission is to serve society. Serving customers is built into the business model of Grab. In particular, the company is solving transportation issues for women who need safe means to travel as well as the underprivileged such as the low-income, rural and disabled communities. “Our company’s mission is to serve and empower others,” she emphasised.
How stewardship values can outlive founders
Mr Mark Goyder, Founder and CEO, Tomorrow’s Company, followed up with a discussion with Mr King and Ms Tan. Mr Goyder raised the issue of sustaining a company’s value beyond the current leadership. Ms Tan said that Grab’s founders are actively involved in the process of selecting leaders that agree with and understand the company’s vision and culture. This will help ensure that the values will outlive the founders. “We want to make sure that Grab is an ‘everybody company’,” she said.
The discussion shifted to how some markets can avoid the pitfalls that several western societies are currently experiencing when it comes to stewardship. Mr King advised that it really comes down to the concept of ownership. He reminded the audience again that the board has the most important stewards and that shareholders have limited rights. There must be a company-centric governance model and the board is most informed to disseminate knowledge and information about the company. He also encouraged more diversity for board members, saying that the membership should reflect the changing times and needs of the market. “Boards must not be male, pale and stale. You need diversity and to get millennials on board,” he said.
Rooting stewardship in long-term ownership
Professor Steen Thomsen, Novo Nordisk Foundation Professor, Copenhagen Business School, next touched on the variety of business owners and their relationship to stewardship. He described a wide range of owners of a company, from short-term to long-term, and why they perceive stewardship differently.
Short-term owners are typically financial investors, hedge funds and asset managers. Long-term owners are the founders, family owners, foundations and members of state-owned enterprises. Strategic shareholders and private equity firms reside in the middle.
Due to the difference in investment timeframes, Professor Thomsen believed that not all owners can be stewards.
For stewardship to be effective, organisations need a long-term secure foundation. Already, the world is seeing the negative effects of short-termism—including populism, business scandals, faster CEO turnovers and credit bubbles. Long-term owners, therefore, are more likely to make better stewards. “The more far-sighted you are, the more considerations you will take in for the long term as an owner to take care of your stakeholders and look at the broader societal impact,” he said.
These long-term owners can step up to the challenge through a variety of methods. Instead of being opportunistic, they can be more agile and sensitive to the needs of the societies and communities they operate alongside.
Going beyond shareholder value
In the next session, Mr Dilhan Pillay Sandrasegara, CEO, Temasek International, highlighted the organisation’s experience in what it means to go beyond shareholder needs. He mentioned that a company’s purpose is never solely to maximise shareholder value. In fact, company law in countries like the United Kingdom demands that the board look at both short-term and long-term interests of the company—in the context of the societies they operate in.
In Singapore, organisations like Temasek International utilise a tripartite approach to benefit a wider base of stakeholders. This consists of the government, companies and other stakeholders working together for the good of companies and those in and around them. He used Temasek International’s collaboration with National Trades Union Congress (NTUC) as an example. The organisation is working with Singapore’s workers’ union to collectively transform businesses in light of Industry 4.0 without leaving people behind. Together, they are organising training committees, bringing union leaders and workers together to actively address opportunities in Industry 4.0. “The Fourth Industrial Revolution must be led by humans, not by robots or automation,” Mr Sandrasegara said.
He went on to say that business leaders can start using an “Anti-CEO” playbook when it comes to managing an organisation. Leaders must be mindful of putting people first and adopting a mindset that recognises that there is dignity in work. Today’s distribution of wealth must impact communities and societies. “Organisations should not just be stewards, but good shepherds too,” he said.
Empowering citizens and consumers to drive stewardship
Mr Goyder posed questions to Professor Thomsen and Mr Sandrasegara, asking how citizens and consumers can get more involved and influence organisations to be better stewards.
Mr Sandrasegara responded by saying that ultimately, companies need to be reminded that they work for consumers because they are the ones who put revenues in the companies. They should have the power to influence a company’s conduct. They have the right to determine the life they want, not just in the political arena but also the economic arena. Leaders need to think of themselves as intergenerational leaders who must be relevant to communities through time. He highlights Temasek International’s responsibilities. “As a purpose-driven organisation, we commit to do well as an investor, do right as a company and do good as a steward,” he said.
Professor Thomsen mentioned that to connect ordinary citizens with stakeholders, organisations and business cultures must be mobilised to ensure that the ultimate goal is to serve others and not themselves. The business landscape needs people who identify with the company and feel that they are committed to the company’s ownership. He also advised that ownership should be focused as well. “If ownership is too diversified, there is no ownership. So, we must reinvent ownership in this sense,” said Professor Thomsen.
A time to act
After the sharing sessions, participants were encouraged to voice their opinions on stewardship. Many agreed that more should be done to promote it among peers and sought to know more about some actionable steps that can be taken to move ahead.
Through the discussions, participants noted the new market forces driven by the millennial generation. Millennials today are gradually becoming a large part of the consumer base. They want organisations to be driven by wholesome purposes and live up to their potential of serving societies. It is also important to set aside a portion of profits for corporate social responsibility activities. However, it must be implemented in such a way that it is done authentically and with impact, instead of just “checking a box”.
Challenges lie ahead in the road to better stewardship. While some organisations practise the principles effectively, they also have to encourage their business partners and additional stakeholders to come on board too. There is more to be done to encourage more participation within ecosystems. Meanwhile, businesses should also be aware if there are trade-offs between stewardship objectives and business goals. Only by seriously reflecting on these issues can businesses be a positive force for good.
Despite the issues, businesses are ready to press forward. According to the results of an interactive survey conducted among the attendees, respondents ranked the three stewardship criteria most important to them as:
- Values and purpose
- Responsible leadership
- Agility and resilience
Market, environmental and social climates are changing and now is the time for businesses to step up and act.
Stewardship must be rediscovered in a rapidly changing world
Mr Heng Swee Keat, Deputy Prime Minister and Minister for Finance, Singapore, in his keynote speech at the “Inspiring Stewardship” lunch series highlighted the value of stewardship in solving business issues in Singapore and the region. The world is changing, thanks to Industry 4.0 technologies, the decline in globalisation advocacy and the growing strategic and economic importance of Asia. To be good stewards, companies must invest in innovation, people and the community.