We need a stronger spirit of stewardship

Posted on

I am in Madrid to speak at the ICA (Spain’s Institute of Directors) international conference.


As the only native Brit speaking I feel uncomfortable talking about good governance when my own country is making such a hash of its decision making.


And there is a parallel. Our political system is failing its citizens because it promotes conflict between extremes rather than a search for agreement.


Likewise our business system is failing shareholders and stakeholders alike with its perverse insistence on the most adversarial approach. One side demands primacy for shareholders and wrongly claims that the 2006 Companies Act represents shareholder primacy. This provokes an equal but opposite reflex in favour of defending stakeholders and undermining shareholders. What is needed and what the law actually provides for, is that directors see themselves as stewards, elected by shareholders, owing their duty to the company and promoting the company’s success by creating value for and with customers, employees, suppliers and society.


It is such common sense but to this day there are still directors, investors, commentators and even regulators in the UK who misunderstand the law.


So in business, as in politics, the search continues for a form of governance and law that helps us discover shared objectives, rather than emphasise our differences.


A stronger spirit of stewardship would help wealth creation and politics alike in serving human purposes.