Conference discusses how successful businesses can create social value ahead of profits
ILLOVO – According to Professor Mervyn King corporate governance and sustainability expert, an interest in good corporate governance has grown tremendously over the last decade.
Successful businesses have started moving away from creating wealth for shareholders to focusing on long-term value creation, according to corporate governance and sustainability expert Professor Mervyn King.
Discussing integrated thinking in corporate citizenship at the 10th annual Serious Social Investing (SSI) Conference at the GIBS Business School in Illovo on 6 August, King argued that value creation, not profit, was human nature.
The SSI conference aims to inspire corporate South Africa, NPOs, philanthropists, investors and local business leaders to drive genuine socio-economic transformation in the public and private sectors.
King said that Corporate Social Responsibility (CSR) and Corporate Social Investment (CSI) in silos are outdated in today’s changing world, adding that it is inconceivable to think that companies would focus on single stakeholders only when there are a myriad of inputs affecting company outcomes.
King explained that integrated thinking extended strategy and daily management beyond the purely financial and encompassed social and environmental factors that deeply affect a company’s viability.
“Companies now work to eradicate or ameliorate the negative impacts their industries have on society and the planet. Prior to 1995, the sole purpose of corporations was to make a profit for its owners. We had a century of unsustainable development because companies made a profit that was subsidised by society and the environment. The principal of financial capital in the past was to create wealth at the top and have it trickle down to the bottom. But the trickle became treacle and never moved down,” said King, adding that the mantra has since changed from how much money companies make – at any cost – to how much sustainable value they can create.
King said the Financial Sector Conduct Authority has issued a guide for asset managers because they have to include environmental impact and social inclusion in their decision making, adding that the interest in good corporate governance has grown tremendously in the past decade.
“[Thanks to social media] we live in a world where companies can no longer hide secrets in corporate closets.”
King said that inclusive capitalism is a radical economic transformation since it considers the economy, society and the environment and therefore has a greater benefit to society than the CSI.
King said that we live in a resource-constrained world. “By 2045, the planet is expected to be home to some 9.3 billion people. We have to produce more while using fewer resources. Natural assets like water are becoming ever more critical to human survival,” he concluded.
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