Does your Company possess a Social License to operate?

Times have changed from those shareholder primacy days of Milton Friedman in the 1970s, to stakeholder capitalism in the 2020s. This change did not occur overnight, and was bound to happen. It is neither CSR nor philanthropy, but purpose that speaks to its core. The idea today is that the corporation would profitably provide solutions to the world’s and society’s problems.

And the corporation is now asked what is the reason it exists?

What is your corporate purpose? I have learnt to ask this of the CEOs of the companies I serve. This is your raison d’etre, and it has to be within the context of society. How does the company serve societal purpose or is relevant to society?

Hmmm, a far cry from profit maximization for shareholders of my youthful AMP days. Today a company needs to strike a balance between shareholder-ism and stakeholder-ism in order to understand corporate sustainability. It is a nuanced concept – the question begs can a company persist indefinitely, viably, in the context of environmental and societal problems? Is it able to live in the natural world and be accepted by society within which it operates?

In simple words – do you have the Social Licence to operate?

What then follows is the Vision-Mission-Values proposition. However, with a new twist. Your Vision has to answer what does success look like to it, where will be its impact? The Mission is what the company does day to day in order to get to success, and Values govern how the company behaves, what principles guide it. AND all this must link to the Sustainable Development Goals.

A Chairman on a board I serve recently said to our CEO, I pity you today you have a tougher job than I did when I was in your role. Yet, I thought to myself, this new generation CEO will have a more meaningful career.

Location: Kuala Lumpur, Federal Territory of Kuala Lumpur, Malaysia

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