No person is an island, not even a corporate person. As the Ubuntu philosophy asserts, "A person is a person through other people." We all depend on relationships to be who we are. Even corporate entities need relationships, not just with shareholders, but also with stakeholders to achieve the objectives for which they are in business to achieve. This is the essence of relational thinking in corporate governance.
The importance of stakeholders — not just shareholders — to the business and welfare of every company is not up for debate. No longer can any company focus on narrow interests of shareholders and ignore the impact on stakeholders, including staff, suppliers, customers and wider society.
It's not enough for directors to guarantee a good financial return for shareholders.They must account for the impact of their actions and their company on stakeholders.
This is the only way to guard against decline in corporate ethical standards, opaque reporting to conceal actual performance, sudden collapse of corporate titans and financial crises.
Take Kenya Power as a company whose mission is powering people for better lives. What we do and how we do it affects virtually every Kenyan, not just government and private shareholders. Kenya Power owns and operates most of the electricity transmission and distribution systems and sells electricity to more than 6.2 million customers as at July 15 last year.
How Kenya Power plans for sufficient electricity generation and transmission capacity; builds and maintains the power distribution and transmission network and retails electricity affects not only shareholders but all Kenyans.
Kenya Power’s directors endeavour to consistently meet its customers' and other stakeholder's requirements and expectations. That's why the Kenya Power Board has been chosen as one of the Model Boards to highlight in this week's Mervyn King Governance Summit organised by the Institute of Certified Public Secretaries of Kenya and Hesabika Trust.
It is underway today and tomorrow at Safari Park Hotel in Nairobi.
Justice Mervyn King SC is arguably the world’s leading authority corporate governance, being the author of the King Reports. The former Justice of South Africa's Supreme Court is considered the gold standard for corporate governance and reporting.
The Summit will ignite discussions, explore case studies and share worldwide experiences with governance experts, practitioners and executives from leading corporates. Its theme: 'Relational Thinking and Corporate Governance'.
Meso is General Manager Corporate Affairs and Company Secretary, Kenya Power