The head of Sweden’s largest pension fund has called for the country’s corporate governance code to enshrine healthy corporate cultures and strong values.
The Swedish Corporate Governance Board is due to present amendments to the Swedish Code of Corporate Governance next month, and Magnus Billing, chief executive of the SEK934bn (€87bn) pension fund Alecta, said it should draw inspiration from recent reforms to the UK’s code by the Financial Reporting Council (FRC).
“I hope the proposal the Swedish Corporate Governance Board now intends to present will take this opportunity and be inspired by the FRC and develop the Swedish code to support and promote strong corporate cultures,” he said. “Corporate cultures that build long-term sustainable values and do not destroy them in an instant.”
Following the corporate governance changes, the board will publish a new recommendation on remuneration and, after consultation, expects to issue new rules to come into effect on 1 January 2020.
The body has already said that the proposed revised code was not expected to involve any major changes, apart from on remuneration issues.
In an article on Alecta’s website, Billing emphasised the importance of companies having a healthy organisational culture, citing management consultant Peter Drucker: “Culture eats strategy for breakfast.”
“In these times of regular corporate scandals both in the Nordic countries and globally, the quote feels more relevant than ever,” Billing said. He cited emissions testing and money laundering scandals, which have affected major European companies including Volkswagen and Swedbank and “destroyed enormous shareholder values”.
“A prerequisite for restoring the demolished values is first and foremost the restoration of confidence in the organisation and its ability to create long-term sustainable values,” the CEO said. “There are not enough clear goals and well-designed strategies and business plans for this to happen.”
“In order to be successful in the longer term, a company must build and maintain good relationships with a large number of stakeholders”
Billing cited the revision last year of the UK corporate governance code, which included an emphasis on corporate culture as a key part of the governance of a company.
The FRC’s reasoning was based on the idea that companies operated in a larger social context, and had to relate to this in order to create long-term sustainable shareholder value.
“In order to be successful in the longer term, the company’s board of directors and its management must build and maintain good relationships with a large number of stakeholders, such as customers, authorities, employees, owners and others,” said Billing.
Nordic leaders meet over SDGs
Corporate leaders from across the Nordic region have met with political leaders to discuss a collaborative approach to addressing sustainability challenges.
The group Nordic CEOs for a Sustainable Future, formed in 2018, met the prime ministers of the five Nordic countries on Tuesday.
The chief executives of Storebrand, Swedbank, Íslandsbanki, Equinor, Nokia and other companies presented their idea at the Nordic Council of Ministers’ meeting in Reykjavik.
They planned to meet the United Nations’ Sustainable Development Goals (SDGs) through greater public-private sector co-operation and a transition to purpose-driven business practices, according to Storebrand.
“The global capital markets are one of the most powerful tools we have in the fight against climate change,” said Odd Arild Grefstad, chief executive of the Storebrand Group.