21st Century Governance​

Once a strategic commitment to positive impact and sustainability is made, strong and effective impact governance is key to stewarding that commitment through strategy, decision-making and accountability.

Governance is the golden thread that connects strategy to action, management to practice and transparency to accountability. It weaves through how decisions are made, how choices are confronted, what gets challenged and what gets done; through strategy and oversight to performance and better, more informed decision-making.

21st Century governance integrates what we know about impact. It starts with strategic commitment to contribute positively to sustainable outcomes and asks what needs to happen differently as a result? It incorporates effective stewardship across dimensions of decision-making, expectation setting and activity that directs attention and resources to acting to avoid harm and doing more that benefits stakeholders and contributes solutions.

Translating strategic commitments into concrete actions, and holding an organisation to account over the short, medium and long-term, is one of the most powerful roles of a board. Applying 21st Century Governance makes this role even more vital – and subject to greater scrutiny as corporations and financial institutions seek to distinguish themselves by their social and environmental contributions to a more sustainable and inclusive society.

Our approach to governance is integrated by design, informed by experience from across the globe and different organisational contexts.

In a corporate context this brings impact and sustainability into decision-making across a Board’s contributions to strategy, culture, people and remuneration, investment and divestiture, performance, accountability, compliance, reporting and risk management.

In an investment context, this brings impact and sustainability into play across the investment cycle, from investment thesis to management and measurement and from product to fund and firm.

In a policy context this brings impact into policy priorities, ecosystem development, value for money, problem definition and the range of policy tools and options and their governance.

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We have a rare opportunity to set the world’s most pro-capital formation and progressive investment standards, for impact investment, climate-resilient investment and SDG-positive investment.

Source: Global Investors for Sustainable Development, Renewed, Recharged & Reinforced, 2020​​

Markets need political and social legitimacy; where organisations lack a sense of mission and purpose it erodes that. What is at stake is different from what we had understood before; this last decade of the 21st Century has already demonstrated that our inability to factor in the public good is inadequate and delivering suboptimal outcomes. Leaders increasingly need to look beyond shareholder primacy and the nature and role of governance has to respond.

Rajiv Lall