Purpose is replacing profit generation as the reason companies exist. Social purpose in business is becoming a global business trend. Yet how do boards ensure their corporate purpose is future-fit? How do they provide oversight of their corporate purpose? How do directors ensure the purpose is driving corporate strategy and culture and how do they know if the purpose is effectively and authentically implemented? What is driving the corporate purpose trend and why?
Governance Professionals of Canada convened a panel of global purpose visionaries and practitioners to answer these questions and more at its 2020 Governance Summit. Purpose Governance: A New Role for Boards is a report of the discussion prepared by Strandberg Consulting.
Purpose Governance: A New Role for Boards is a discussion-starter on the emerging role of boards and governance professionals in providing oversight of corporate purpose. Purpose Governance: A New Role for Boards introduces this new practice which is fast becoming an expectation of boards and their advisors.
Highlights of Purpose Governance: A New Role for Boards
- The pre-eminent role for the board is to have oversight of the organization’s purpose and to make sure it is fit for the future
- “Profit purpose” is on the wane while “social purpose” is on the rise
- Canada is home to best practice leaders such as TELUS and Vancity whose boards have adopted a social purpose as the reason their companies exist and are bringing it to life in their organizations
- Social purpose reflects an evolution from corporate social responsibility approaches that address risks, to having a social purpose as the societal reason a company exists
- Once the board adopts or affirms the corporate purpose, it needs to ensure it is embedded in the corporate strategy and culture and in the overall governance mandate; this requires updating governance documents
- Governance professionals have a central role to play to raise purpose governance with boards and executives and ensure their boards keep abreast of these emerging governance best practices
- Resources to help boards and companies with this work are available, including the Social Purpose Institute and the ISO 37000 corporate governance standard
- Boards set the tone at the top for delivering on the purpose, and need values, guard rails, and a decision-lens to ensure it is executed properly
