The chartered secretary’s role is just as important today as it was when the profession first emerged after the establishment of limited companies in the nineteenth century, the director general of the global Institute of the Chartered Governance Institute said on Thursday.
The Chartered Governance Institute is the new name adopted by the global Institute of Chartered Secretaries and Administrators to reflect the important governance role of chartered secretaries.
The director general, Mr Tim Sheehy, told members of the Institute of Chartered Secretaries and Administrators in Zimbabwe gathered in Victoria Falls for their annual conference that the profession of corporate secretary had emerged at the same time as companies were established to govern their administration.
There had been an understanding then that companies would act responsibly in return for limited liability.
“Well into the 1970s for the most part corporations were run for all stakeholders. Labour unions were strong. Everyone had a job for life and a pension and companies invested in communities,” he said.
There was a social contract that embraced environmental performance, ethical business conduct, workers’ rights and safety, community relationships and an equitable sharing of benefits, he said.
However, this social contract became eroded and replaced by the concept of the primacy of the shareholder and the overriding goal of increasing profits to maximise shareholder value.
With the erosion of the social contract the community began to lose faith in the corporation and capitalism. People questioned the excessive pay earned by chief executives and increasing gap between their pay and that or ordinary employees, the massive layoffs of workers, environmental damage and climate change, and exploitation in the supply chain.
The exclusive focus on shareholders became no longer sustainable. He said large institutional investors such as pension funds and sovereign wealth funds were driving the change.
Worldwide pressure on such funds to ensure sustained growth through good governance had grown. They now exerted significant pressure for better governance.
Social impact, climate change and diversity were issues being raised by today’s major international investors. Environmental, social and governance issues, as well as risk management and cyber risk, were the current growth topics.
Mr Sheehy said institutional investors, aside from financial performance, now focus on the governance of companies they invest in. They often turn to the company’s chairman and company secretary for insight.
The company secretary, occupying a unique position as the link between the board, management and shareholders, was best placed to champion good governance within an organisation.
The company secretary had always had the role that sits between management, the board and shareholders. Now this role was extended to management, the board, shareholders and stakeholders.
“The Chartered Secretary and Chartered Governance Professional is even better placed to play a key role in facilitating better communication to shareholders and stakeholders,” Mr Sheehy said.
Institute of Chartered Secretaries and Administrators in Zimbabwe chief executive Dr Lovemore Gomera said the local institute had decided at its annual general meeting to change its name in line with the name change of the global body.
It had decided to work towards changing its name, after the necessary legal steps had been taken, to the Chartered Governance and Accountancy Institute of Zimbabwe (CIS).