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Malaysia Leads World in Stakeholder Capitalism Governance Language

This year’s Securities Industry Development Corporation (SIDC) Sustainable and Responsible Investment (SRI) Virtual Conference 2021 coincides with a change in the Malaysian Code of Corporate Governance (MCCG) 2021, which may be the first anywhere to incorporate the principles of Stakeholder Capitalism.
By Uantchern Loh
Stakeholder capitalism in Malaysia has been given a boost with the introduction of the following paragraph in the revised Malaysian Code on Corporate Governance 2021 that recognizes the interests of all stakeholders.
“Stakeholder confidence can only be strengthened if companies think seriously about the reasons for their existence, how they deliver on their purpose, and then explain, in their own words, how the company applies the principle and practices of the MCCG. Such transparency and honesty will support companies in building the trust of its stakeholders and potential investors.”
This ground-breaking paragraph will be discussed at the Stakeholder Capitalism session of the SIDC Sustainable and Responsible Investment (SRI) Virtual Conference 2021, June 16-17 in Malaysia. The virtual event is open to all interested parties. I will join Bruce Bolger, Founder of the Enterprise Engagement Alliance, on a panel on Stakeholder Capitalism.  Click here for more information and to register.
Stakeholder confidence can only be strengthened if companies think seriously about the reasons for their existence. Companies exist for what their stakeholders believe in. The Business Roundtable has declared that companies should serve not only their shareholders and maximize profits, but also deliver value to their customers, invest in employees, deal fairly with suppliers, and support the communities in which they operate. Purpose, as described by Larry Fink, Chairman and CEO of BlackRock, is not the sole pursuit of profits but the animating force for achieving them. “Purpose is not a mere tagline or marketing campaign. It is a company’s fundamental reason for being – what it does every day to create value for its stakeholders.” 
Stakeholder Capitalism starts with purpose. Understand what your stakeholders believe in and integrate their beliefs and values into your strategy. 
How purpose is delivered. To succeed in this time of disruption, companies will find that purpose serves to help people focus on what is important. Companies should consider how their purpose can help the organization to grow and open commercial opportunities for long-term success, allowing the company to move forward in a world where ‘business is unusual.’  Purpose and profits are not at odds with each other. In fact, becoming a purposeful company will be crucial for creating sustainable profits over the long term. But this can be derailed by bad culture. Purpose determines the culture of the company and a misaligned culture can result in strategy being eaten for breakfast.
Culture is the result of shared beliefs, values, attitudes, actions, and behaviors in the company. Make culture a key part of your sustainability and resilience framework.
Explain, in their own words, how the company applies the principle and practices of the MCCG (Malaysian Code of Corporate Conduct). Such transparency and honesty will support companies in building the trust of its stakeholders and potential investors. Truthful and authentic communication plays an integral part in combatting low corporate trust.  A report needs to adhere to the fair, balanced, and understandable principle and it needs to communicate accountability. However, this does not necessarily generate trust on its own. Equally, combatting low corporate trust is not simply a matter of transparency and more communication. Companies need to communicate an authentic and company-centric corporate narrative and must be wary of simply regurgitating popular boilerplate words that hold little meaning and only generate more cynicism with stakeholders. The updated <IR> Integrated Reporting Framework, which is supported by the MCCG, encourages the holistic communication of value creation, preservation, or erosion over the short, medium, and long-term as the next step in the evolution of corporate reporting

In Russian legends there is a person called the yurodivy or truth-teller. The yurodivy questions things that are taken for granted, just like the “An Inconvenient Truth” documentary film about former US Vice President Al Gore's campaign to educate people about global warming. Be willing to be a truth-teller in all your stakeholder communications.
Uantchern Loh is Chief Story Teller for Black Sun Asia, a stakeholder communications consultancy. 

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Join the EEA to begin your certification process or see our other resources below. 
Or contact Bruce Bolger;; 914-591-7600, ext. 230 to learn more.
Enterprise Engagement for CEOs:The Little Blue Book for People-Centric Capitalists
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Enterprise Engagement Benchmark Tools: The Enterprise Engagement Alliance offers three tools to help organizations profit from Engagement. Click here to access the tools.
•  ROI of Engagement Calculator. Use this tool to determine the potential return-on-investment of an engagement strategy. 
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