TRUST is a valuable commodity, and it permeates everything from a boardroom decision involving a merger and acquisition to the simplest act of making a promise to call your loved ones.
Any decision, especially one made by a boardroom, needs to ensure that stakeholder trust is present and that it will not lead to unnecessary and excessive risks.
Malaysia is currently facing a trust deficit that is cutting across both public and private sectors — a quick glance at the headlines is evidence of that.
This trust deficit is due to the abuse of trust and has to be rectified through good corporate governance.
According to Institute of Corporate Directors Malaysia (ICDM) chairman Tan Sri Zarinah Anwar, trust deficits can be combated through good corporate governance, particularly at the boardroom level. In fact, good governance corporate expectations continue to be the focus of regulators, investors and other stakeholders, who all demand that companies commit to ethical behaviour and act with integrity.
“Built on a foundation of transparency, accountability and trust, good corporate governance practices are fundamental to a company’s success, enabling access to capital, mitigation of risks and safeguarding against mismanagement,” says Zarinah.
Therefore, good corporate governance must start at the boardroom, as it is the nerve centre of any company or entity.
The board has the responsibility to ensure that there is no disconnect between governance and strategy on the long-term sustainability of the business.
Boards must continue to review governance standards, especially when it comes to soft spots in crucial areas such as risk management practices, incentive structures, board composition and oversight responsibility.
More shareholders are holding company boards to account over financial performance and corporate governance. In addition, shareholders are examining the sustainability of their investment with a magnifying lens, with areas such as social impact and gender diversity examined with greater intensity.
Zarinah says while the law provides board regulations on what not do, more needs to be done to nurture a culture that encourages boards to “do the right thing”.
“Between the two, we need to upskill and provide boards with strategic, leadership and governance skills to oversee a sustainable business,” she explains.
ICDM, through its conferences such as the upcoming International Directors Summit 2019 (IDS) is aiming to effect more change in corporate Malaysia, starting the conversations about practices that can set a better foundation for companies to reduce their trust deficit and reach equilibrium, particularly in an environment that is volatile, uncertain, untrusting, unfair, complicated and ambiguous.
“ICDM’s objective is to change ineffective board cultures by imbuing board effectiveness and directors’ professionalism through directors’ education, competency-based sourcing of directors, board effectiveness evaluation and feedback, and research and advocacy,” Zarinah says, adding that its programmes are designed to ensure that boards are the drivers of holistic governance in their businesses.
She says ICDM has no regulatory function and is fully supported by regulators. It was established to help boards and individual directors equip themselves with the skills and competencies needed to comply with legal and regulatory requirements, and it aims to be the voice of members advocating issues of common interest as may be raised by members.
“This inaugural International Directors Summit marks an important milestone for Malaysia as we enter the next phase of growth in our corporate governance journey. In this era of unprecedented disruption, there is an urgent need for the public and private sectors to work in concert towards building a forward-looking and resilient directory community,” says ICDM president and CEO Michele Kythe Lim.
“This is extremely crucial in ensuring the success and longevity of companies as well as making sure that our capital market is distinguished by our competence, integrity and quality of governance.”
The IDS, to be held at Shangri-La Hotel in Kuala Lumpur on Oct 14 and 15, is the first regional platform that will gather global corporate leaders and directors to network, collaborate, exchange insights and meet with the greatest minds in governance to take on the largest issues facing boardrooms today — serving as an impetus for conversations around corporate governance.
More than 30 local and international prominent personalities will be addressing topics such as emerging trends, diversity challenges, boardroom dilemmas, sustainable value creation, the digital revolution and the best practices in global governance.
Board directors, aspiring directors, members of the C-suite and executive leadership, public-listed companies, government-linked companies, government-linked investment companies, private companies, small and medium enterprises, family-owned businesses and start-ups are encouraged to participate.
This article first appeared in The Edge Malaysia Weekly, on September 23, 2019 – September 29, 2019.