Steward Leadership in the Boardroom: Creating a Sustainable Future
Head of Research & Engagement, SAC
20 July 2023
As the business narrative moves from shareholder capitalism to stakeholder capitalism, doing well and doing good, or better still, doing well ‘by’ doing good has emerged as the 'Yin' and 'Yang' of the corporate world, underscoring the need for balancing the opposite yet interconnected forces.
The recent pandemic has propelled sustainability discussions from CSR (corporate social responsibility) departments to the forefront of leadership team meetings. Incremental pressure from investors, employees, customers, and even activist shareholders has pushed the C-suite to be more accountable for the environmental and social impact of their organisations. Boards, as the senior-most leadership team within enterprises, also routinely dedicate significant time to understanding the sustainability landscape in terms of risks and impact.
However, while sustainability conversations have become more prevalent, they often unfortunately remain superficial. Board directors may lack clarity on what sustainability truly means for their company, resulting in divergent visions and approaches. Some directors adopt a process-oriented, check-the-box mentality, while others strive for holistic, long-term transformation.
Moving beyond passive compliance and regulation, companies require a comprehensive sustainability 'ethos' that permeates every facet of their operations, engaging employees, customers, and investors alike. The challenge lies in transitioning from 'viewing sustainability as a collection of activities culminating in a disclosure report’ to ‘embracing sustainability as a way of life, deeply ingrained within the organisation’s culture'.
Steward Leadership: Paving the Way
Research from the Stewardship Asia Centre (SAC) underscores the pivotal role of a culture of stewardship, or creating value for all stakeholders, in propelling organisations forward on the progressive path of doing well by doing good. Steward leadership entails a genuine desire and persistence to create a collective better future for all stakeholders. To bring steward leadership to life, progressive board leaders foster a stewardship purpose, and embrace the following four key stewardship values (see the ‘Steward Leadership Compass’ graphic), in addition to other personal and organisational values:
- Interdependence: View the world as an interconnected system in which individual success depends on the success of others. Recognising the interconnectedness of the world, board leaders must actively partner and encourage management teams to collaborate with regulators, government agencies, vendors, suppliers, partners, customers, and shareholders to participate in the sustainability ecosystem.
- Long-term View: Create sustained value for both current and future generations. Boards must foster sustained value creation for current and future generations, shielding management from short-term shareholder agendas and championing a longer-term perspective.
- Ownership Mentality: Take proactive responsibility to make stewardship happen. Corporate boards must proactively lead the charge in creating a collective better future, rather than waiting for other entities and peers, or external forces to drive the sustainability agenda.
- Creative Resilience: Develop tenacity to find innovative solutions to disruptive challenges. Boards should encourage innovation and reward tenacity and resilience in individual leaders and management teams, enabling them to find innovative solutions to disruptive challenges for humanity.
Along with embracing the four values, boards and management teams must also jointly articulate the organisation’s ‘stewardship purpose’, which goes beyond individual and organisational agenda. They must also use the purpose and values framing for all operational and strategic decisions, regardless of external circumstances.
The Complex Journey Ahead
Building sustainable organisations with a long-term vision is a challenging endeavour. The sustainability matrix encompasses not only obvious mega-trends but also hidden surprises. Technological advancements enable connectivity and efficiency, but socio-political uncertainties, resource inequalities, and environmental degradation threaten organisational and human existence. Achieving a secure and long-term business future demands a delicate balance that prioritises the collective betterment of all stakeholders.
While boards play a pivotal role in driving this agenda, it is the management teams who execute it. Moreover, a broad base of employees must also embrace the ethos of doing well by doing good. The linchpin in fostering purpose- and values-based steward leadership is the organisation’s culture. And, culture is not built in a day. It is a gradual multi-year process of re-enforcing and rewarding behaviours that are dear to the organisation, while discouraging, even penalising behaviours that are contrary to the long-term values and beliefs of the collective.
According to SAC research, the efforts boards invest in curating, promoting, and driving a culture of stewardship yield the best returns in advancing the sustainability agenda internally. Steward leadership purpose and values help organisations and leaders navigate the sustainability matrix, remaining relevant, agile, proactive, and resilient for a lasting future.
Creating a Lasting Legacy
Boards and board directors have the power to establish a competitive edge and enduring value by fostering an environment that nurtures a stewardship culture. Only then can organisations pursue their ‘true north’, living their purpose and values to drive business growth and profi tability, while simultaneously creating a sustainable, collective future for all stakeholders.
Published in Board Stewardship Inc.’s July 2023 e-magazine issue, viewable here.