Cinnamon Grand Hotel, Colombo
Diarietou Gaye, Country Director World Bank
Sri Lanka and Maldives
I would like to thank you for asking me to address this audience as it is always a pleasure for the Bank to interact with the private sector. Today’s subject is one that puts us on top of what modern business is all about.
If the 19th century was about manufacturing and the 20th about IT, then the 21st Century is about sustainability. This will mean that business will be very different from what it is today. The world has been rebooted; processing speeds need to gather momentum. Concerns about climate change, increasing pressures on the world's resources, significant changes in demographics and society, growing social concerns such as poverty, deteriorating social equality, and corruption have combined to make managing sustainability a central issue for businesses as well as governments, worldwide. One thing is certain the economic and business value will create sustainable value only when the change is radical and transformational. The fact that we are here today delivering a sustainability award is a testimony that Sri Lanka understands that to induce change and create value, business value will need to undergo dramatic innovation too.
Never before have capital markets been so interested in how companies are facing and the dealing with the opportunities and challenges associated with the environment, societal change and governance.
These are global issues that have an impact in every country, and every community.
We at the WB passionately believe in Sustainability. The Bank’s vision is centered on sustainable development as summarized by our President.
“It is the vision of the World Bank Group to contribute to an inclusive and sustainable globalization, to overcome poverty, to enhance growth with care for the environment, and to create individual opportunity and hope.”
The world is facing the consequences of the Financial Crisis – weak reporting and oversight have been large contributors to the current financial crises – leading to several high-profile corporate scandals and banking failures, property market collapses – Economic Crises which have the impact of reduced employment, and increasing poverty. There is a general sense of distrust regarding companies’ ability to self-regulate and a belief that existing company disclosures tell an incomplete story.
The current challenges reinforce the need for companies to reliably measure the impact of their own organization's activities on the environment. Developing these measures – "accounting for sustainability" – has become an urgent task.
The sustainability movement is not a new concept. Companies have been adopting green policies for some time. But today - perhaps more than ever - businesses need to establish a new level of leadership in sustainability.
I am pleased to note that Sri Lanka has been involved in Sustainability Reporting for 8 years and that the corporate sector is embracing the sustainability principles in their business strategy. Award programmes like this highlight the positive role of the business sector in resolving sustainability issues as they can lead the way in the seismic shift that is required to make a long term positive impact. It is vital to ensure that sustainability challenges are addressed in Sri Lanka’s plans for growth as Asia’s response to sustainability challenges will have a huge impact on the global environment.
Let me now turn to the subject of responsibility of companies today and organize the rest of my talk around 2 key pillars: (i) governance and transparency; and (ii) inclusiveness.
Good corporate governance is a must for today’s complex and dynamic business environment to ensure long-term sustainability. There is no single good model of corporate governance. What constitutes a good corporate governance structure is defined by the circumstances of each company. However there are fundamentals to any good governance structure such as;
- The need for integrity among the decision makers of a company together with responsible and ethical decision making
- An empowered, skilled and independent board of directors appropriate for the company’s operations.
- Formal mechanisms that encourage Board and management effectiveness.
- Well defined share holder rights
- A sound control environment
- High levels of transparency and disclosure and integrity of company reporting
It is important for companies to continuously review their corporate governance practices to ensure that they are aligned with and reflect best global practices. This will help Sri Lankan companies to be equipped to compete globally and secure investor confidence. Demonstrably good corporate governance is a determinant of the cost of capital in a global capital market.
As important is the need to recognize the crucial linkages between corporate strategy and development, and implement business models and corporate strategies that fight poverty, increase transparency and inclusiveness while delivering profits.
This is an area we believe Sri Lanka’ Private Sector can do much better.
There is a misconception that development and poverty reduction is the role of the government. But believe me, when you think of a population of 20 million and look at an inclusive growth, the company’s corporate strategy can promote drastic changes. Very good example can be found in this country in the mobile industry or in the food industry, where companies have made a point to ensure that their operations benefit a large number of citizens.
Diversity and inclusion should also be an integral part of a company’s vision and strategy. Companies should create an inclusive business environment where diverse minds—employees with varied perspectives, different backgrounds, skills, and experiences--work together to meet the demands of today’s corporate world. This collaboration is an organizational asset and brings forward greater creativity and innovation.
The World Bank has been having numerous consultations with the youth especially in the North and the East. They are crying for opportunities. You need to see the diverse potential you can harness by extending fresh opportunities to these young people. It would do two things. It would create a positive mind set among a set of people who feel they have not yet been included in the development of the country and it would also open doors to different market forces which will give fresh impetus to your businesses. As business leaders I urge you to tap into this huge potential and you will be surprised with what you can gain. They have ideas, can be very innovative and they are ready to contribute.
Let me now make a special pitch for women in the context of inclusion. I will open this chapter with a quote from the Ministry of Foreign Affairs in Denmark:
“Women and girls make up three-fifths of the world’s one billion poorest people. Promoting women’s participation in the labor force and increasing women’s incomes hold a critical potential for poverty reduction and economic growth, including in the rebuilding of post-conflict societies. “
In SL it seems that only 32.3 percent of females aged 15+ participate in the labor force. Female labor force participation is highest (50.2%) among females aged 40-44 years. There are many reasons for theses low number, but I would like you to consider that companies have a social responsibility to be more “women focused” and foster a culture of equal opportunity for women at all levels of the organization structure including middle to upper management.
Sri Lanka has a high percentage of educated women. A very high percentage of graduates are women too. But how many women really have climbed to the very top of companies? How many women are on your Boards today? I did a random check and the results were not great at all.
How many companies believe that women are the harder working, more conscientious, I would guess many of you here would agree. But how many companies have facilities such as crèches, flexi hours etc. These are investments that can make a great difference in the work dynamic of any modern company.
Let me conclude my purpose by thanking you again for this opportunity and reiterate the fact as you embrace sustainability, you will achieve enhanced financial performance from energy and materials cost savings, have greater access to capital, will be able to drive innovation and retain competitive advantage, achieve enhanced reputation and brand development; and achieve market share capture and product differentiation. You will have the ability to attract and retain the best talent (including women); increase employee productivity and health; improve communication, creativity and morale in the workplace. You will create better stakeholder relations and be able to manage exposure to increased carbon regulations.
In reporting you contribute to increase transparency around the social and environmental impact of companies, and their governance structure. It will help change internal management practices including better manage relationships with employees, investors, customers, suppliers, regulators, and civil society.
I congratulate you all for being visionary businessmen and women in embedding the sustainability principles in to your strategy making this a part of the DNA of your companies.
I would really like to get to know you better and see how The World Bank Group can also help in making your businesses more sustainable to face the challenges of the Century
Thank you. Have a great evening.