With the spread of globalization, the array of business opportunities, economic growth, diverse resources, need for international investors, global financial crises, climate change crises, ecological overshoot, radical transparency, greater expectations from stakeholders, population growth, digital and net generation era, and the realities of business unusual, there has been increasing advocacy among thought leaders on how to take African corporate and public institutions to the level of sustainable operation. Discussions around corporate and sustainable governance have become trendy across the world, not leaving out Africa and it is the responsibility of all Africans to ensure that the future of the continent is sustained.
Corporate Governance (CG) has been defined in various ways. Succinctly, it is the structure and the relationships which determine corporate direction and performance. The concept covers a wide range of relationships between management, directors and other stakeholders within justified interests, and the board of directors is typically central to corporate governance. The corporate governance framework also depends on the legal, regulatory, institutional and ethical environment of the community. Whereas the 20th century might be viewed as the age of management, the early 21st century is predicted to be more focused on governance.
It is therefore significant to promote effective governance for sustainability and drive the overall crux of sustainable governance along important considerations for governments, organizations, business leaders, investors, consumers, and many other stakeholders throughout the world.
Sustainable Governance (SG), therefore seeks to provide the tools for incorporating environmental, social, and governance (ESG) or sustainability factors into how organizations manage themselves from a strategic, operational, and reporting perspective.
Sustainable Governance in Africa
The following considerations are pertinent to attaining to sustainable governance in Africa:
- Governance is a system by which companies are directed and controlled and its key pillars are commitment & responsibility from the board, management, transparency, accountability, and fairness. Governance is not about forceful compliance, audit, or box-ticking; it is about an individual’s quality and the drive to do only right things at all times. Governance should be about ethics and personal laws, compliance to right practices because it is morally and ethically right, as well as safe to the environment and not necessarily because it is the legal thing to do. Corporate governance cannot be imposed as values cannot be enforced.
- Governance should be about integrated thinking, not silo thinking; about the interconnectedness and interdependence of companies on societies – the environment and the econom It should be about considering the voices/input and expectations of all stakeholders – risk of stakeholder activism. Integrated thinking is considering the whole value creation process through input, output, outcomes, and impacts.
- Corporate Governance is not a one-size fits all affair and so, Africa cannot afford to pick CG models from existing ones from the west rather, the continent needs to decide its own model. With 54 individual countries, having diverse cultures and languages, it gets increasingly difficult for the continent to arrive at a unified CG model even though a model is needed for a proper functioning of governance however, each country should decide on an attainable model, which will reflect its peculiarity, culture and essence – of course very country specific. Companies should choose the governance structure most compatible with their assets, reputation and structure
- Sustainability must be Integrated into the core/heart/strategy of a company right from the start as companies that are now impacting the society and the environment positively had looked at the sustainability issues in their locality and grafted them into their business strategy and as such are attracting substantial support from stakeholders and of course, venture capitalists.
- Stakeholders are the ‘voices of reason’ for boards – they inform boards and guide management to ensure a balanced approach to sustainable profits / sustainable capitalism. Stakeholders are also ‘influencers of materiality’ – they confirm the relevance of material issues and future (sustainability) focus of companies – inclusivity of stakeholders confirms good CG (Professor Meryvn King). Include your stakeholders and see your company boom, disregard them and experience first-class stakeholder activism that can crack the whole system.
- Governance is not so much about comply or explain as it is about apply and expla Reporting on CG ensures transparency, accountability, comparability, inclusiveness, accuracy, sustainability context, completeness, balance, timeliness, clarity and reliability. Every organization must give an account of its governance performance using any of the several approved models- GR1; G4; Integrated Reporting.
- Citizen’s satisfaction should be the only measurement of the level and quality of governance, as the present civil activisms and violence witnessed in Africa stem from the lack of good governance. Spelling out the duties of government to be to do governance properly, be responsible, accountable, transparent, and apply healthy rules in appointing board members in both private and public companies, these are the ways to ensure that sustainable governance is achieved. Furthermore, sustainable Governance guarantees return on investment.