Governance for a better world beyond profit

The old idea that making the most money is the only goal of business is changing. We’re in a new time where companies need to care about helping society. Businesses must make sure their plans match up with what’s good for people and the planet. Gone are the days when profit maximisation was the sole objective. Modern consumers, investors, and employees expect businesses to contribute positively to society and the environment. This shift in mindset has brought a renewed focus on corporate governance, as organisations seek to ensure that their actions are aligned with their stated purpose.

This change is driven by the growing understanding that customers, investors, and workers want companies to be open and honest. A company’s image is now closely tied to how it treats people and the planet. This means companies need clear rules and systems to make sure they do the right thing.

“A company’s image is now closely tied to how it treats people and the planet. This means companies need clear rules and systems to make sure they do the right thing.”

Corporate governance is essentially the system of rules and processes by which a company is directed and controlled. It encompasses a wide range of issues, from board composition and executive compensation to risk management and ethical conduct. Although governance has traditionally been seen as a compliance function, it is now increasingly recognized as a strategic tool for driving business performance, including innovation, risk mitigation, and value creation.

The link between purpose and governance is undeniable. A clear and compelling purpose provides a North Star for an organisation, guiding decision-making and inspiring employees. When this purpose is embedded in the company’s governance framework, it becomes a powerful force for creating long-term value.

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For instance, an organisation like eHealth Africa, with a mission to improve healthcare access, exemplifies the power of purpose-driven governance. It prioritises investments in research and development, partnerships with government and non-profit organisations, and community outreach programs. The governance system ensures that these initiatives are aligned with the company’s overall strategy and that there are appropriate controls in place to measure and manage risks. It ensures that every action aligns with the company’s broader goals and that systems are in place to measure progress, identify potential challenges, and manage risks effectively.

When purpose is integrated into governance, companies foster deep trust with customers, investors, and communities. This builds a strong reputation that attracts and retains top talent eager to create positive change. Employees are more likely to be engaged and motivated when they believe in the company’s mission. Customers are more likely to be loyal when they see that the company is making a positive impact on society. And investors are more likely to support companies with a strong purpose and governance framework.

However, aligning purpose with governance is not without its challenges. It requires a deep understanding of the company’s values, mission, and vision. It also requires a commitment to transparency and accountability. Companies must be willing to measure their progress against their stated purpose and make adjustments as needed.

A critical challenge lies in transforming purpose from a mere marketing veneer into the core DNA of an organisation. It demands a deep-seated commitment that permeates every facet of the company, from the executive suite to the frontline. Only then can a company authentically live its purpose. This requires leadership buy-in and a willingness to empower employees at all levels to contribute to the company’s purpose.

Another challenge is balancing the pursuit of purpose with the need to generate profits. While it is important to create a positive impact on society, companies must also be financially sustainable. This requires careful planning and resource allocation.

The concept of stakeholder capitalism offers a valuable lens through which to view purpose-driven governance. Prioritising the interests of all stakeholders – employees, customers, investors, communities, and the environment – is essential for creating shared value and building long-term resilience.

ESG (Environmental, Social, and Governance) factors are integral to effective purpose-driven governance. Therefore, integrating ESG factors into business operations is critical for attracting socially responsible investors. Embedding ESG considerations into core business strategies enables companies to mitigate risks, enhance reputation, unlock new opportunities, attract sustainable investments, and drive long-term value.

The pursuit of purpose brings numerous benefits, however, it is essential to address potential conflicts of interest among stakeholders. Transparent communication and robust governance mechanisms can help mitigate these challenges. As the business landscape continues to evolve, the significance of purpose-driven governance will only increase.

In conclusion, aligning business purpose with robust governance principles is essential for building a sustainable and successful company. This approach fosters a thriving ecosystem where shareholders prosper, employees flourish, customers are delighted, and communities thrive. Adopting this approach positions companies as leaders in sustainability, resilience, and social responsibility, creating enduring value for all stakeholders.

Ota Akhigbe is the Director of Partnerships & Programs at eHealth Africa. She is a passionate advocate for social impact and believes in the power of business as a force for good.