Corporate governance standards and expectations continue to evolve in response to rising demands from investors, regulators, and stakeholders – and in response to continuous improvement on the part of high-performing boards. In recent years, with more companies clarifying their purpose as their meaningful reason to exist, their boards are beginning to broaden their oversight role to include “purpose governance”.
These trends are documented in this first-ever State of Purpose Governance in Canada report, published by the Canadian Purpose Economy Project in collaboration with The Directors College, Governance Professionals of Canada, Chartered Governance Institute of Canada, Canadian Corporate Counsel Association, Competent Boards and Watson Board Advisors.
Defining purpose governance as “the board’s role in oversight of the company’s purpose”, the report summarizes a survey of nearly 200 corporate directors and governance professionals who are members and alumni of the partnering organizations.
The majority of participants report their organizations have a purpose statement approved by the board that sets out why their companies exist, and half responded this purpose was in fact a “social purpose” to contribute to a better world. While most are advancing their purpose through their corporate strategy, they also report facing some purpose governance challenges, particularly how to monitor and disclose purpose integration and impact – critical roles for boards of purpose-driven firms. This is not surprising in light of the fact that according to respondents few boards have received purpose education or education on the board’s role in purpose oversight. Going forward, respondents believe purpose expertise or experience will be an important consideration in board recruitment to help address this knowledge gap.
I’m pleased to be a faculty member for both The Directors College Chartered Director Program and Governance Professionals of Canada Governance in Practice Education Program which introduce purpose to directors and governance professionals in their strategy and other modules. Those going through their certification programs will learn about the emerging trend to boards adopting and stewarding their organization’s corporate purpose.
As expectations rise for companies to have and disclose their purpose and performance on it, and as governance organizations increase purpose education for boards and governance professionals, purpose will become a central feature in corporate boardrooms in the years ahead.
To learn more, listen to this free recording of a recent webinar on “What is the State of Purpose Governance in Canada?”
