Directors must focus on national development

YES, profit is paramount to shareholders and sustainability of companies, but that is only one side of the coin. Company directors, as responsible corporate citizens, should be patriotic and maintain a balance between the need to make profits and meeting legitimate expectations of society.

This will ensure the companies they lead play an important role in the country’s development.

As we drive towards Vision 2030, we need a mindset change on how we approach national development issues.

Corporate governance has undergone a metamorphosis in recent years, focus has shifted from profits and shareholder returns to national development.

Public interest

Companies do not exist in a vacuum, but operate within the broader spectrum of society. This gives them social and developmental responsibilities.

Companies are not only engines for economic development, but are also agents for social development and transformation, and play a critical role in creating employment and alleviating poverty.

According to the US-based Global Corporate Governance Forum: “Corporate governance has become an issue of worldwide importance. The corporation has a vital role to play in promoting economic development and social progress. It is the engine of growth internationally, and increasingly responsible for providing employment, public and private services, goods and infrastructure. The efficiency and accountability of the corporation is now a matter of both private and public interest, and governance has, thereby, come to the head of the international agenda.”

Development

Growth of the Zimbabwean economy as envisioned under Vision 2030 cannot be realised without the private sector. Companies play a pivotal role in the economic development of our country as they run industries, mines, financial services, insurance, agriculture, health and other critical economic activities.

Companies provide critical public services and infrastructure. The major employer and creator of jobs in any economy is the private sector.

In view of the above, company directors should take a keen interest in supporting Government’s efforts in turning around the economy in line with Vision 2030.

Corporate citizens

Companies physically operate within communities and as such must be sensitive to broader societal issues.

From a sustainable development point of view, being a “responsible corporate citizen” means that a company has to strike a balance between its economic and social responsibilities in order to enhance the standing of the company at the market place and in society.

Good corporate governance requires companies to focus on sustainable development issues. Sustainable development encompasses three “interdependent and reinforcing pillars” which are: economic development, social development and environmental protection.

The general misconception is that sustainable development is the responsibility of Government. Companies play a pivotal role in sustainable development and act as agents in creating employment and alleviating poverty.

Captains of industry need to keep abreast with sustainable development issues as decisions they make in the boardroom impact on national development.

Emerging corporate governance standards require company directors to look into sustainable reporting, something that was new a decade ago. In other words, sustainability should now be in the DNA of company directors.

The Zimbabwe National Code on Corporate Governance (Zim Code) has provisions on sustainable development and also incorporates integrated sustainable reporting standards.

Company directors should, therefore, maintain a balance between the need to make profits on one hand and meeting legitimate expectations of society on the other, to ensure sustainable development for the benefit of current and future generations.

CSR

Corporate Social Responsibility (CSR) goes beyond donations to charity. CSR is about demonstrating the value that a company brings to society and gaining the trust of stakeholders, that its operations are conducted in a responsible and sustainable way.

Being a “responsible corporate citizen” means that a company has to strike a balance between its business objectives and the accompanying economic, social and environmental responsibilities.

Company directors have an obligation to serve not only the interests of shareholders, but the interests of a broader spectrum of stakeholders which include the community and society in which they do business.

Partners in development

In conclusion, company directors should think outside their core mandate and begin to see companies they lead as agents of national development and social transformation.

Vision 2030 cannot be fully realised if the corporate sector does not redefine itself and begin to take an active role in supporting the Government in national development programmes.

The economic challenges in Zimbabwe require a partnership between the corporate sector and Government, to enable us to transform our economy and realise our socio-economic developmental aspirations.

Companies should view themselves as key agents in building an inclusive and broad-based economy that takes everyone on board, an economy that is robust, designed to create employment for the youth, promote innovation, entrepreneurship, develop infrastructure, alleviate poverty and raise the living standards of the people.

◆