Majority of CEOs Cite Corporate Stewardship as Key Influence on CSR and ESG Initiatives
The Pearl Initiative (PI), a leading independent nonprofit organization working to improve corporate accountability and transparency globally, has launched its exclusive report on corporate stewardship internationally.
The report, titled ‘CEO Perspectives Report: Corporate Stewardship in Times of Crisis,’ provides in-depth insights from 35 regional business leaders, including eight female executives, from across 14 industries on their perceptions on corporate stewardship, its implications, as well as the impact of COVID-19 on corporate stewardship and its future. Corporate stewardship is defined by PI as a principle creating shared values across the company while also addressing a triple bottom line: people, planet and profit.
PI’s launch took place at a virtual roundtable, convened by Ranya Saadawi, executive director, in the presence of eminent industry leaders, along with other PI officials and prominent media personnel. As per one of the findings from the report, 62% of CEOs consider corporate stewardship as the guiding principle that influences their decision on the Corporate Social Responsibility (CSR) and Environment, Social and Governance (ESG) initiatives of their organizations.
Badr Jafar, founder of Pearl Initiative and CEO of Crescent Enterprises, said: “We mustn’t see the individual components of E, S and G as being mutually exclusive. They are linked, and we cannot do justice to any one of them without the other. Environmental and social goals are two sides of the same coin, and I like to think of the governance dimension, the G, as the edge of that coin, which binds everything together. In fact, governance in many ways is the most important aspect of the ESG agenda, as strong corporate governance creates the foundations upon which a business’ agenda of corporate stewardship is built.”
According to the report, most of the participating companies found it essential to implement corporate stewardship from the top of the organizational hierarchy for it to become effective and be followed by employees. It further revealed that while corporate stewardship is primarily led by the C-suite executives and the HR department, internal stakeholders - employees and investors - have increased influence on the social mandates of their organization.
The report also underscored that while corporate governance ensures meeting the minimum standards, corporate stewardship opens the opportunity for organizations to take the maximum benefit for both the company and its wider stakeholder community. Of the CEOs featured in the report, 76% agreed that having a robust reporting standard is essential in their business processes and believed that aligning them with international reporting standards such as the Global Reporting Initiative (GRI) would enhance corporate stewardship.
The COVID-19 pandemic also weighed on companies, prompting them to review their corporate stewardship and ESG commitments, which are areas often given the least priority during tough times. However, businesses are now revisiting their internal governance frameworks to readjust policies to ensure business continuity. Companies also reassessed their risk management protocols to ensure stakeholder value, regulatory compliance, and business resilience.
“We believe that firm and forward-thinking corporate stewardship will determine the future of economic success,” Ayman Tamer, chairman and managing partner of the Tamer Group, said.
The report further suggested that it is crucial for companies to evaluate the long-term effects of COVID-19, both from economic and geopolitical perspectives, and an understanding of how other industries and sectors are coping. These are critical for the development of the business going forward, it added.
The report also found that the pandemic has initiated companies to refocus their CSR investments to support other components such as activities that are more responsive to the needs of their stakeholders, community and frontline staff who deliver essential services. Technology adoption and improved employee health and safety, as well as employee retention scored high in terms of priorities following the pandemic.
Jamal Fakhro, managing partner of KPMG, highlighted the importance of engaging and educating the youth, who will inevitably comprise the future workforce.
“As it stands, the corporate environment is fast-paced and has ever changing policies. Meanwhile, the youth have a huge influence on raising awareness on various areas of concerns today, which will be the catalyst for positive change as they live in an environmentally challenged world,” Fakhro said.
Prior to the global health crisis, companies had a strong focus on environmental initiatives such as switching to energy-saving appliances and establishing standards to reduce the consumption of resources. Going forward, people will see a growing link between nature, environmental protection, urban design systems and the overall health of the public.
Commenting on the report, Saadawi said it examines how C-suite executives manage their businesses despite challenges posed by unprecedented events such as the COVID-19 pandemic. “The pandemic had a far-reaching impact on the future of corporate stewardship, bringing it to the forefront where companies need to start creating stewardship agendas to remain relevant and resilient to future uncertainties. Most of the executives who responded to the interviews have a firm belief that corporate stewardship will become an essential aspect of the daily operations of businesses,” said Saadawi.
Regardless of sector or industry, COVID-19 has made companies address key trends such as embedding environmental sustainability practices across the business’ supply chain; engaging and educating youth and the future workforce; prioritizing the physical health and mental well-being of employees and their families; and establishing effective reporting and communication channels.