Sustainability needs ‘good governance and good disclosure’

December 15, 2019

RIYADH — The GCC Board Directors Institute (GCC BDI), a non-profit organisation for board members, concluded the 7th annual GCC BDI Chairman Summit with a strong message to corporate boards in the region: “Corporate governance matters enormously to the nature of our economies and the kind of growth we want to see. If we are to build economies that work for all, then we must address the issues of short-termism. If we want corporations to take a longer-term, broader, and more inclusive view of the value they create, then we need rules and policies that encourage and support this.”

Taking place on November 20 at Al Faisaliah Hotel in Riyadh in collaboration with the Saudi Stock Exchange (Tadawul) and with the support of Nasdaq, this year’s event explored the theme of ‘Corporate Governance – Beyond Shareholder Value’. The summit examined how to create long-term value, what are the sources and drivers of value creation and how they should be embedded in organizational strategy. It also highlighted best ways to avoid the pitfalls of short-termism, and how this is linked to increasing investor focus on sustainability and environmental, social, and governance (ESG) issues.

In his opening remarks, Mohammed Al-Shroogi, Chairman of GCC BDI, said: “Value creation is the primary aim of any business entity. From a financial perspective, value is often viewed in terms of a return on investment. But today, analysts are looking at a broader definition of value creation and suggesting that traditional methods of assessing organizational performance are no longer adequate in the modern economy. Value creation in today’s companies is increasingly represented in the intangible drivers like innovation, people, ideas, and brands. While many organizations are still focused on finance – making money for their shareholders – the real question is how to achieve long-term value now and in the future.”

In his keynote interview, Mohammed El-Kuwaiz, Chairman of Capital Market Authority, Kingdom of Saudi Arabia, highlighted there is always an important balance between growth, and sustainability. From the CMA’s view, Sustainability requires 2 main components, good governance and good disclosure. He also highlighted there are several initiatives happening in the Kingdom to promote sustainable development. From the capital market’s perspective, we are focused on helping companies access to capital, investor access and products access. Saudi Arabia’s focus on corporate governance as part of its transformation program resulted in its rise from the 77th to the second position in the shareholder governance index in the Global Competitiveness Report 2019 issued by the World Economic Forum (WEF).

Eng Khalid Abdullah Al Hussan, CEO of Saudi Stock Exchange (Tadawul), emphasized the work that has been done to ensure the readiness of Tadawul in terms of technical systems, connectivity, reliability, and market infrastructure, not only for local but also for international investors.

For his part, Conor Kehoe, guest speaker and Senior Partner Emeritus and Special Adviser at McKinsey & Company, said: “How can directors add more value – for shareholders – and also well beyond? The message is quite simple – more engaged governance leads to better outcomes in organizations, but engaged governance may require more attention to board composition.”

As calls to ‘go green’ from businesses, influencers, and thought leaders increase, climate change presents significant risks and opportunities for companies and investors. In this context, the GCC BDI Chairman Summit explored strategies that can be adopted by corporations to navigate through these challenges.

Jane Valls, Executive Director of GCC BDI, said: “The outcomes of the fruitful and progressive conversations at this year’s event clearly indicate that the GCC BDI Charmain Summit has become a crucial platform for thought leadership and raising awareness on key trends for boards and directors.”

Other speakers included Michael Morcos, Managing Partner at Heidrick & Struggles, Andrew Steel, MD and Global Head of Sustainable Finance at Fitch Ratings, Chris Stevens, Vice President of Nasdaq, Rayan Fayez, MD and CEO of Banque Saudi Fransi, Nasser Sulaiman Al Nasser, Group CEO of the Saudi Telecom Company (STC), Dr Hans-Martin Stockmeier, Senior Partner at McKinsey & Company, His Excellency Dr Ghassan Al-Sulaiman, Chairman of the National Center for Family Businesses, Katherine Garrett-Cox, CEO of GIB UK and Member of the Supervisory Board at Deutsche Bank, Charles Tilley, CEO of the International Integrated Reporting Council, Mutlaq Al-Morished, CEO of Tasnee, Dr Waddah S. Ghanem Al Hashmi, Senior Director – Sustainability, Operational & Business Excellence at Emirates National Oil Company (ENOC), and Hani Ashkar, Territory Senior Partner – Middle East at PwC.

The GCC BDI Chairman Summit is an annual leadership event that focuses on relevant conversations around corporate governance and has attracted over 110 participants since its inception in 2013. — SG

December 15, 2019
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