Can Purpose Deliver Better Corporate Governance?
- 28 - 30 October 2020
John Almandoz, IESE; Marco Becht, Solvay Brussels School and ECGI; Jordi Canals, IESE; Fabrizio Ferraro, IESE; Mireia Giné, IESE and ECGI; Colin Mayer, University of Oxford and ECGI; Joan Enric Ricart, IESE; Paola Sapienza, Kellogg School of Management and ECGI.
About this event
The traditional notion of companies as profit-maximisation institutions is under challenge for being too narrow and not responding well to the pressing issues of our time. Purpose is, or can be, a powerful lever for sustained long-term value. And, if purpose matters, how can corporate leaders infuse corporations with a greater purpose? What roles do the CEO, the board of directors, and shareholders have in designing, strengthening, and reinforcing (when needed) corporate purpose?
The notion that companies should have a corporate purpose or mission that goes beyond financial performance has been considered in the fields of management, organisational behaviour, law and the economics of organisations for a long time. But the increasing weight of ESG dimensions in corporate governance and asset management, the call for positive societal impact, and the competition to attract and retain top talent -among other factors- draws us firmly closer to a deeper consideration of corporate purpose. At this turbulent time, ‘Corporate Purpose’ has galvanised a global movement that promises to restore trust in companies, to produce goods and services without doing harm, while providing a fair return to employees and shareholders.
Many of the world’s most valuable companies already have a clear purpose. Google had enshrined societal goals in its mission statement when it was founded in 1998: “to organize the world's information and make it universally accessible and useful”, along with a mantra of “Don't be evil”, somewhat echoing the “Do no harm” principle. Over a decade later, with a swelling of public discourse, the markets have joined the movement calling on businesses to make a positive contribution to society and to refocus corporate governance around a multi-stakeholder perspective. As businesses in turn, reflect on their purpose, they must also consider the questions that complicate the implementation of a vision or purpose and make it meaningful.
What defines a good corporate purpose and how can investors and board directors distinguish one that has merit from another that does not?; What makes it meaningful, the words or results?; How is it measured or assessed?; What drivers translate the purpose into a firm’s strategy and corporate culture?; What is its relationship with business performance?; Is it a luxury, distraction, marketing tool, or can it help to unify, strengthen and navigate crisis responses?; What roles do the CEO, the board of directors, employees and shareholders have in designing, strengthening, and reinforcing organisational purpose? Are there conflicting legal or market-related obstacles to be addressed when formulating a purpose?; Does it matter if the purpose is lacking any binding legal effect and operational significance?
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John Almandoz (IESE); Marco Becht (Solvay Brussels School, ECGI and CEPR); Patrick Bolton (Columbia University and ECGI); Jordi Canals (IESE); Fabrizio Ferraro (IESE); Claudine Gartenberg (The Wharton School at the University of Pennsylvania); Mireia Giné (IESE and ECGI); Jordi Gual (CaixaBank); Rebecca Henderson (Harvard Business School); Bengt Holmström (MIT and ECGI); Sophie L’Hélias (LeaderXXChange and ICGN); Baroness Denise Kingsmill (Inditex and IAG) ; Juvencio Maeztu (CEO of IKEA); Colin Mayer (Saïd Business School, University of Oxford, British Academy and ECGI); Paul Polman (former CEO of Unilever); Joan Enric Ricart (IESE); Paola Sapienza (Kellogg School of Management, Northwestern University and ECGI); Henry Tricks (The Economist); José Viñals (Chair, Standard Chartered); Luigi Zingales (University of Chicago Booth School of Business and ECGI)