South Africa: Walking the Talk of Stakeholder Capitalism

opinion

The role of corporate boards has never been more important, nor subject to as much scrutiny, as it is today. The technological, environmental, geopolitical, and socio-economic transformations of the past two decades are driving a re-examination of the prevailing corporate-governance model, just as they are posing fundamental challenges to many areas of public policy and governance.

In particular, these transformations are making environmental, social, governance, and data stewardship (ESG&D) considerations increasingly important to companies' financial performance and resilience. This broad change is eroding the traditional distinction between a shareholder-primacy model (which focuses on financial and operational costs and benefits) and a stakeholder-driven model (focused on environmental and social risks and opportunities).

Issues previously considered secondary for CEOs and boards - matters once handled by companies' stakeholder-relations, philanthropy, and information-technology departments - have become important determinants of firms' capacity to create and sustain economic value. For example, climate change, water management, and other aspects of environmental stewardship are increasingly recognised as bottom-line issues in a world where technology, regulation, and other features of the operating environment can change quickly.

Similar challenges apply to the management of intangible assets - a key source of competitive advantage in the Fourth Industrial Revolution. The...

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