Why Indian companies need Board Stewardship ?
Trust is the cornerstone of a thriving business environment. It builds credibility and fosters long-term relationships between companies, shareholders, employees, customers, other stakeholders including the wider society. When Boards prioritise trust, they contribute to the sustainable growth, reputation of companies and the larger industry ecosystem. In recent years, the importance of corporate governance has gained significant recognition in the Indian market. Effective corporate governance not only adds value to companies, but also builds trust among stakeholders.
At the core of corporate governance lies board stewardship, which goes beyond mere compliance and financial performance. Board stewardship plays a crucial role in nurturing trust by promoting ethical conduct, transparent decision-making, and responsible management practices. We should recognise that improved corporate governance is not just about securing a valuation premium; it is about actually building trust among stakeholders.
Board stewardship plays a pivotal role in strengthening corporate governance practices by emphasising trust, going beyond compliance, ensuring independence and diversity, promoting ethical leadership, and driving long-term value creation. As companies in India navigate an evolving business landscape, prioritising board stewardship will enable them to establish a culture of trust, ethical conduct, and sustainable growth. While corporate governance frameworks provide guidelines and regulations, board stewardship surpasses mere compliance. It encompasses a proactive and holistic approach to governance, focusing on the long-term success and sustainability of the organization. Board stewardship emphasises the strategic direction, ethical decision-making, risk management, and accountability of the board. By embracing board stewardship, companies can transcend basic compliance and truly drive excellence in corporate governance.
An effective board requires independence and diversity of perspectives. Board members should possess the expertise, experience, and skills necessary to provide strategic guidance and oversight. Independence ensures unbiased decision-making, while diversity brings fresh ideas, creativity, and a broader range of insights. Board stewardship emphasises the importance of selecting directors who can exercise independent judgment and contribute to effective governance.
Board stewardship goes hand in hand with ethical leadership. Board members are responsible for setting the ethical tone at the top, establishing a culture of integrity, and ensuring that ethical standards permeate throughout the organisation. Ethical conduct is not just a compliance checkbox; it is a fundamental pillar of trust-building and sustainable business practices. Boards must champion ethical behaviour and create an environment where ethical considerations are integrated into decision-making processes.
Board stewardship is centered around long-term value creation. While short-term financial performance is important, boards must also focus on sustainable growth, stakeholder engagement, and environmental, social, and governance (ESG) factors. By embracing board stewardship, boards can drive strategic decisions that balance the interests of various stakeholders, contribute to social responsibility, and mitigate risks, thereby ensuring the long-term success and resilience of companies. By fostering trust through effective board stewardship, Indian companies can forge stronger relationships with stakeholders, attract investment, and contribute to India’s economic growth and prosperity.
Author:
Dr. Srinath Sridharan – Author, Policy Researcher & Corporate Advisor
Twitter : @ssmumbai
LinkedIn : https://in.linkedin.com/in/srinathsridharan
Blog : https://srinath.blog
