Just prior to the Covid pandemic, 181 CEO’s representing America’s leading companies signed the forty-eighth annual letter titled ‘Principles of Corporate Governance’. Between them, these members of Business Roundtable manage a combined workforce of 20 million employees and a turnover of $9 trillion.
Their message was a revocation of total shareholder supremacy in preference for a business model in which CEOs ‘commit to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities, and shareholders too’. This statement encapsulates perfectly the dramatic, truly seismic, shift facing everyone who manages a commercial enterprise.
In the wake of a global pandemic and amidst the clamour for more sustainable business practices, the role of the CEO has been redefined. Today’s business leaders are recognising that placing Environment, Social, and Governance (ESG) principles at the core of their strategies is not just about corporate responsibility; it’s a vital component for achieving long-term shareholder growth. This shift towards ESG-focused governance is not merely about financial oversight. It encompasses a broad spectrum of risk mitigation, from navigating market disruptions to adapting to environmental changes and evolving tax regulations. Reporting these risks transparently is no longer optional, but a necessity for trust and credibility in the eyes of stakeholders.
A significant number of UK’s senior decision-makers have acknowledged the legacy of Covid-19 as a catalyst for digital transformation. The ‘Digital First’ approach has become imperative, prompting organisations to re-evaluate their operational models, streamline processes, and ultimately, foster innovation to enhance customer experiences.
The concept of ‘Digital First’ is not an IT strategy; it is a business strategy that permeates every aspect of an organisation. It involves examining each point of interaction between employees and business processes and integrating digital solutions to optimise productivity and profitability. The pandemic has underscored the necessity for such a strategy, revealing the pitfalls of outdated systems and the critical need for robust digital infrastructure.
The transition to VoIP telephony is a case in point. Despite the impending switch-off of ISDN and PSTN lines, many businesses were caught unprepared, highlighting a broader issue of insufficient governance and foresight.
The shift towards automation is undeniable. Reports from the Stanford Institute for Economic Policy Research indicate a significant portion of the U.S. workforce is now remote, with artificial intelligence increasingly handling customer interactions. This trend is not confined to large corporations but is becoming ubiquitous across businesses of all sizes in the UK.
The automation of routine tasks is reshaping job roles, with administrative positions increasingly becoming redundant. Embracing this change not only increases efficiency but also aligns with the ‘lean and agile’ mantra necessary for businesses to remain competitive in the ‘new normal’.
The rise of cloud computing has facilitated the remote working revolution, but it also necessitates a heightened focus on cybersecurity and information management. As employees become increasingly mobile, the need for secure, instant access to information becomes critical. Effective information management goes beyond traditional platforms like MS-SharePoint, requiring sophisticated communication tools that connect teams and customers seamlessly.
From an ESG perspective, the digitisation of work processes is not merely a response to a global crisis; it’s a strategic move towards sustainable growth. A well-executed Digital First approach can have a profound impact on an organisation’s ESG initiatives. It allows for the reduction of environmental impact through digital rather than physical processes, supports social aspects by facilitating flexible working conditions, and enhances governance through improved transparency and efficiency.
While shareholder interests remain a priority, they are now considered alongside broader societal impacts. Profit generation is no longer seen as an end in itself but rather as one component of a company’s overall contribution to society. A Digital First strategy, when aligned with ESG principles, can simultaneously drive value, reduce operating costs, and demonstrate a commitment to societal and environmental benefits.
It is incumbent upon today’s leaders to not only endorse but actively drive the implementation of a Digital First, ESG-centric business model. Leadership must foster a culture that embraces change, prioritises sustainability, and recognises the interdependence of profitability and societal well-being.
In this new era, businesses must be built to withstand not just the current crisis but future disruptions as well. A resilient business model is one that is flexible, adaptable, and capable of thriving in a digital-first, ESG-conscious landscape. By leveraging technology and innovation, businesses can ensure continuity, even in the face of unforeseen challenges.
The ‘new normal’ demands a reimagining of business practices. CEOs and business leaders are now guardians of a future where long-term shareholder growth is achieved through a commitment to environmental stewardship, social responsibility, and strong governance. By integrating a Digital First approach within the ESG framework, businesses can lead the charge towards a more sustainable, equitable, and profitable future. This is the new paradigm for growth in the new normal.
Leads the daily operations at ESG PRO, he specialises in matters of corporate governance. Humperdinck hails from Bermuda, has twice sailed the Atlantic solo, and recently devoted a few years to fighting poachers in Kenya. Writing about business matters, he’s a published author, and his articles have been published in The Times, The Telegraph and various business journals.
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