Fostering Good Governance
By Thomas Timlen
In an age of ‘fake news’ and untruths, corporate governance has become more important than ever.
Regulation has further heightened the need for good governance, with the UK Bribery Act having a significant impact. But has it not always been the case that without disciplined and strategic corporate governance, success is impossible, or at least more difficult for breakbulk stakeholders?
“I would say that there is some truth to all of those statements,” said Anna Larsson, head of communication and corporate social responsibility at Wallenius Wilhelmsen ASA. “For Wallenius Wilhelmsen, corporate governance is about being a responsible company, it’s an integrated and essential part of how we conduct business.”
She said that its suppliers, customers, investors and partners all need to be able to trust the company, so it puts managing business ethically and efficiently at the heart of how it works and as a basis for success. Along the entire supply chain, Wallenius Wilhelmsen is committed to fair competition, anti-corruption and anti-bribery, which is reflected in its company-wide code of conduct.
“Compliance to all relevant rules and regulations is a necessary base, but we also go above and beyond that,” Larsson added.
‘As Old As The Hills’
Good corporate governance should encapsulate a company’s shared values, culture, systems and business approach, according to Teik Poh Goh, managing director of Global Maritime Talent Pte Ltd. “It is as old as the hills,” he said, “and it sets the tone for what’s right and what’s not for the company. Hence I wouldn’t go so far as to say that it’s more important these days than before.”
In Goh’s view, “well-run organizations that ‘walk the talk’ put in place good corporate governance even when it wasn’t fashionable.” Those procedures and processes may have been less formalized, but they still served to set the principles by which an organization operates.
“This doesn’t necessarily guarantee that companies with such robust systems will automatically be successful, but it ensures that the beliefs and operating philosophies, whatever they may be, are indeed known and complied with,” Goh said.
Those views were echoed by Kathy Canaan, Fluor’s global director trade compliance. “I believe that any company that hopes to build sustainable success and positively serve all of its stakeholders must have a strong corporate governance system regardless of political climate or the prevailing winds of media culture,” she told Breakbulk. “Legislation, enforcement and negative attention may change the way companies behave; but, affecting actions is not the same as building culture. So, I wouldn’t say that corporate governance is more important than ever; it has always been critical.”A company today must have a good understanding of its role in society, understand its stakeholders and be transparent. For Wallenius Wilhelmsen, that means having a Global Reporting Initiative, or GRI, platform for governance and reporting, starting with a structured process for identifying material risks and opportunities. That reporting is an audited, integral part of its annual report in line with a GRI framework.
Wallenius Wilhelmsen is also aligned with the UN Sustainable Development Goals. “We have commitment at the highest levels of the company and ensure good communication both internally and with external stakeholders to ensure we are aware of needs as they evolve and that they are aware of our performance, Larsson said.
Importance is also placed on sincere, active and ongoing communication with all stakeholders.
Mark van Herk, CEO of the LV Shipping & Transport Group, pointed out that corporate governance, trade compliance and code of business ethics procedures cannot be developed and then left on the shelf. “We must live and breathe compliance with all relevant government regulations. Compliance is in the DNA of our culture.”
Good corporate governance that is well executed will rein in unsavory or unfair practices, in addition to ensuring that the company’s guiding principles are complied with. The buzzwords to watch for are transparency, accountability, trust, equality, lawful, compliance and ethics.
Check And Check Again
For LV Shipping one key factor to the success of all corporate governance programs is “Denied Entity/Restricted Party Screening.” This is explained by the need for continual and repetitive screening of employees, clients, vendors, subcontractors, service providers, legal, financial, business development consultants and visitors, which is essential to avoid trading or establishing relationships with companies or persons that are on financial or export control sanctions lists.
Another incentive is reducing the risks associated with non-compliance. LV Shipping has invested in the cost of compliance to mitigate the risk of the potentially higher costs of non-compliance. Operating globally in compliance with the relevant regulations of all governments is a continuous process that involves stakeholder awareness training, together with the vetting and screening all customers, subcontractors and partners.
“We also conduct regular internal control audits as well as periodic audits of our partners worldwide,” said Murray Cooper, director of corporate governance at LV Shipping.
Achieving the desired goals requires concrete steps. Cooper outlines several: “Every six months, LV directors and the global strategy team meet up to review performance management indicators predicated on our value chain, composed of LV’s business purpose, business strategy, organizational capability, resources, management systems and customer feedback.
“We realize that our business purpose must be supported with a complementary business strategy. Furthermore, our organizational structure needs to be capable of delivering our business strategy supported by the necessary resources and management systems. These links in our value chain coupled with our corporate governance, quality, health, safety, security and environmental, or QHSSE, policies and procedures are only as strong as the weakest link in the value chain.”
For LV, the cornerstone for protecting its reputation is good corporate governance implemented in alignment with adherence to trade compliance regulations and following its QHSSE guidelines. It aims to foster a culture that promotes responsibility, accountability, mentoring, innovation, code of business ethics, trust, transparency, teamwork and achieving goals developed to maintain good corporate governance, enhance customer service, improve process and add value to the financial sustainability of the company.Along For The Journey
It’s also important to engage all staff in the corporate governance journey, managing policies, procedures, strategies, goals and key performance indicators based on a top-down and a bottom-up communication and alignment strategy. Making completion of international anti-corruption and anti-bribery training, such as that offer by TRACE International, mandatory will further cement governance ideals.
Governance also has a role to play in attaining sustainability goals. Wallenius Wilhelmsen’s Larsson sees corporate governance as a necessity for sustainability. “Sustainability is something we prioritize, not just because it is morally right, but also because it is fundamental for long-term value creation. We see sustainability as a driver for business development and growth.”
Wallenius Wilhelmsen’s vision is to enable the industry’s journey towards the next generation of propulsion solutions for deep-sea shipping, and as such it actively engages in the development and support of novel solutions that can take it there. The main initiative through which it seeks innovations is through the Ocean Exchange innovation forum at which its annual US$100,000 Orcelle Award is presented.
If any doubt remains regarding the importance of corporate governance, Goh puts it to rest: “While company stakeholders may have different objectives, good corporate governance, in my view, is an embodiment of all that a company stands for and aspires to be. It is also assumed that such goals do not condone illegal means to achieve the overarching objectives, no matter how tempting these may be.”
Good corporate governance, properly executed, should enable stakeholders to embrace shared values and ensure that these operate concurrently to achieve desired goals and outcomes. “Stakeholders who are looking for shortcuts to success or are of the gunslinger variety should therefore look elsewhere to build their career or make their money,” Goh said.
But more can always be done, and the private sector could shoulder greater responsibility here, according to Canaan. She believed that corporations should lead from the front, be visible, proactive, and accountable – these go a long way towards creating and maintaining good standing.
“More practically speaking,” she said, “I think two things are essential: exceptional leadership and the empowerment of employees to speak up when they see something they think is not right. I am very proud to be part of a company that has a strong compliance and ethics program that encourages employees to seek guidance and report concerns.”
Thomas Timlen is a Singapore-based freelance researcher, writer and spokesperson with 28 years of experience addressing the regulatory and operational issues that impact all sectors of the maritime industry.
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