Global governance plays a significant role in global economic growth and financial stability, and gives emphasis on attaining inclusive growth through digitisation and women empowerment, a senior banking executive has said.
Doha Bank Group CEO Dr R Seetharaman stressed on the need for economies, institutions, and individuals to follow governance during a special address at the ‘16th London Global Convention on Corporate Governance Sustainability Global Business Meet’ hosted by the Institute of Directors, India from October 17 to 20.
“It can be called corporate governance for institutions and global governance for economies. Individuals are affected by corporate governance and global governance due to the links with institutions and economies, respectively.
“Institutions cannot afford to ignore the long-term and focus only on the short term as the long term is achievable only when it is sustainable. Today, sustainable growth remains a challenge for economies and for corporates, as well,” Seetharaman said.
According to Seetharaman, corporate structure and culture should focus on linking performance objectives and combining performance measures, and should have a consistent design and implementation across organisations.
“Improved oversight over board compositions, improved disclosure and transparency, and the effective use of audit functions are key areas which require focus.
Boards are increasingly considering sustainable development issues at the committee level. Board excellence contributes to sustainable development,” he stressed.
Seetharaman, who also participated in the session ‘Changing Role of the Boards – Global Trends’, said diversity on corporate boards is associated with more effective corporate governance and improved financial value.
He said: “Board diversity, which includes not only gender diversity, becomes really important in ensuring the board is fit to drive change towards a sustainable business. Solving sustainability problems requires working across functions and this can happen if the senior team has collaborative leadership styles.
“The board should recognise the importance of staff, customers, communities or risks associated with the limitations of natural resources.
An understanding of these issues on the business model, long term success and ability to deliver on strategy are critical.”
Highlighting the current trends in corporate governance, Seetharaman said fines, penalties, and settlements faced by global financial institutions recently have re-emphasised the importance of corporate governance.
He stressed that risk management, remuneration and incentive systems, board skills, independence, and shareholder engagement “are key areas that need focus.” The functions of chief executive officer and chairman of the board are separated, he noted.
“Shareholders should be proactive. Institutional investors should be encouraged from acting together in individual shareholders meeting provided that they do not intend to obtain the control of the company. The role of independent directors has evolved with changing regulations to being a sounding board for compliance and a governance watchdog,” he added.