Directors are responsible for overseeing the governance of a business and have a fiduciary obligation to act in the shareholders’ best interests. However, boards must also take into consideration the needs and interests of all stakeholders — including employees suppliers, customers as well as communities, investors and many more. This approach is called stakeholder management and is one of the core principles that underpin the ESG (environmental social and governance) movement that is revolutionizing the way companies are managed across the world.
A board of directors could assume a variety of roles within an organization but at its heart it’s a team who works together to achieve its goals. A well-functioning board can play many roles, including setting strategy giving support and direction to management, and ensuring the company is operating in accordance with its mission and vision.
In terms of stakeholder engagement, a successful board should seek out different perspectives to comprehend the unique challenges and opportunities the company faces. It should also be able create clear channels of communication between the board members and the stakeholders. This is not only an essential aspect of corporate management, but it is important for building trust between the board and the stakeholders. Stakeholders will be more likely to do business with an organization that is transparent and open in its reporting, as it shows that the board takes its responsibilities seriously. In addition, it can help build a better image for the business and boost its long-term value.
