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Takeways from IEE Roundtables

March 11, 2020—CSR & Sustainability Roundtable
Shall the purpose of business include purpose for society? Always and at what cost?

Led by Pete Dignan, founder of Ever Better

  1. Since all business enterprises are value creators, developing a sense of purpose begins with the questions, which value? And for whom?
  2. The sense of purpose is part of the DNA of a business. Having a purpose is more inherent to the very essence of a business than having a social cause and having a corporate philanthropy program.
  3. Pursuing any purpose in business may lead to unintended social consequences. If Oscar Wilde was an entrepreneur, he could have said, “We know the price of everything and the cost of nothing.” Businesses could employ systems to assess social areas in which they perform poorly. Ideally, a system of materiality tests could be used to assess to what extent the purpose pursued in a business is socially responsible. Response mechanisms triggered by detected failures could help recalibrate business practices towards a more socially-responsible purpose.
  4. And if businesses lack a sense of purpose, boards of directors could guide management to listen to customers and employees, who are essential sources of purpose.
  5. In time of restricted mobility and social interactions, these additional resources could help further deepen the topic:

Further readings

Movie suggestions

Feb. 13, 2020—Governance & Leadership Roundtable
Merging Organizational Cultures in the Boardroom, Preserving Ethical Values

Led by Jane Bomba, President of Saddle Ridge Consulting and former EVP of IHS Markit

  1. The emphasis on culture drives the success of M&A transactions. Ethics is a subset of culture and a key ingredient of organizational integrity principles that affirm that there is no right way to do a wrong thing.
  2. It’s important to distinguish acquisition of operational units, full integrations, mergers of equals, and international mergers because the complexity of ethical challenges are different. The goal and nature of the M&A transaction determines how to form the ethical culture.
  3. Due diligence processes are crucial to assess organizational cultures and begin a process of integration. The strength of vision, mission, values, code of conduct and enterprise risk management are paramount to enable cultural assessment.
  4. Yet other diagnostic tools should be developed and deployed to assess culture, such as risk dashboards and culture dashboards.
  5. Boards should utilize these tools for a more effective quantification of cultures.
  6. Engaging a variety of stakeholders, including customers, could enable more ethical approaches to M&A to avoid ending up just with gains for the bankers, and pains for everyone else.

Nov. 5, 2019—Ethics & Compliance Roundtable
The Ethics of Public-Private Partnerships

Led by Tim O’Brien, Auditor of the City and County of Denver

  1. Governance and stakeholder engagement are crucial for the effectiveness of Public-Private Partnerships (PPP) and to avoid ethical mishaps. Divergent interests connected with the creation of PPP must be aligned not exclusively through financial mechanisms but rather through a transparent management process.
  2. Governance must emphasize risk management to enable PPP to minimize dysfunctionalities and reduce the costs of non-contractible events.
  3. Stakeholder engagement is the ethical approach to the design and execution of PPP. The public must be involved not only through elected officials but also through initiatives of dialogue and shared decision making.
  4. Rethinking forms of public finance is a collective ethical responsibility towards society. Current needs for modernization of infrastructure demand innovative ideas to go beyond the PPP framework.

October 10, 2019—Governance & Leadership Roundtable
How do Boards and Management Shape and Share the Sense of Purpose?

Led by Rand Stagen, former chairman of Conscious Capitalism

  1. There is growing, empirical evidence that purpose leads to more sustainable and successful companies. This evidence is leading to a more shared belief that the purpose of a corporation goes beyond maximization of shareholder wealth.
  2. Instilling a sense of purpose within business organizations must start with a self-reflection on, what is my individual purpose? CEOs and directors alike must engage with this question personally.
  3. However, there are big challenges that prevent purposeful management and governance. The biggest challenge is short-termism, either self-inflicted or due to external pressure of institutional investors.
  4. The key is to emphasize that the fiduciary role is to the company itself, not to one or the other stakeholder alone.
  5. “Managing for the Long-Term” in the Harvard Business Review and the book “Finite and Infinite Games” were among the resources mentioned during the discussion to further deepen the implications of a long-term orientation in leading companies.

May 8, 2019—CSR & Sustainability Roundtable
Unpacking Larry Fink’s Letters to CEOs and Board Chairs

Led by Sandy Rothe, retired managing partner, Deloitte

  1. Private companies have become significantly more accepting of the oversight function of boards of directors.

    It is still hard to directly speak about ethics within boards and between the board and management; yet, there are several discussions about topics deeply connected with ethics.

    Two issues at the core of fostering ethical governance and management culture are trust and communication.

  2. Onboarding processes for new directors are crucial to set a tone and expectations that meet standards of trust and communication.

    Yet continuous processes aimed at sharing values (not just formal meetings) and assessing culture (are we who we think we are?) are crucial to strengthen the role of the board within private companies.

  3. Strong, effective boards of private companies then have a unique opportunity to nurture corporate social responsibility through a deeper sense of purpose, long-term oriented strategies and greater alignment with all stakeholders.

    And if all other stakeholders are taken care of, then shareholders are taken care of as well.

March 7, 2019—Governance & Leadership Roundtable
Understanding and Managing Ethical Dilemmas in Privately Held Companies

Led by Bill Heck, chairman emeritus, NACD Colorado Chapter, and Hugh Rice, senior chairman, FMI Capital Advisors, Inc.

  1. Corporate social responsibility means different things for companies in different industries and at different stages of development.

    However, a stakeholder (not just shareholder) approach to management and governance is imperative for a successful business. For this reason, reflecting and nurturing a sense of purpose could become a distinctive competitive advantage.

    Boards should help management shifting from fear of not being relevant to aspiration to become relevant.

  2. Balancing short-term results and long-term value is a critical issue for investment managers, since different stakeholders have different time horizons.

    Chris Pelley suggested Willful Blindness by M. Heffernan, which explores how at times we ignore apparent threats and what mechanisms to use to overcome resistance to change.

    Boards should help management engage in discussions about future risks to anticipate the future rather than simply rationalizing the past.

  3. Addressing societal, including political, issues can be vital for international companies.

    Complexities and uncertainty in the economic, social and environmental environments boost the relevance of CSR strategies, policies and initiatives.

    Boards should provide the impetus to undertake proactive rather than reactive CSR.

  4. Younger generations are more sensitive to CSR cultures within business organizations. They demand more and can be more equipped to navigate the complexity of stakeholder management.

    Higher education has contributed to fostering a broader view of the nature and value of capitalism.

    Boards should be characterized by diversity of perspectives to leverage the richness of different backgrounds, experiences, and views.