Session Four: Good Value: Reflections on the Global Financial Crisis and the Way Ahead
12:45PM – 2:30PM, November14, 2009
Luncheon Address by Mr Stephen Green, Chairman of HSBC Holdings PLC, followed by a Q&A session
Moderated by Mr Barry Desker, Dean, S. Rajaratnam School of International Studies, Nanyang Technological University and Vice Chairman, Singapore Business Federation.
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The luncheon session focused on how businesses could adopt “good values” and rebuild the global economy in a more sustainable and responsible way. Some have argued that the ‘business as usual’ model prevalent before the financial and economic crisis has proven to be damaging in the long run. Alternately, the value-based model has been touted to be the preventive cure in avoiding a repeat of the crisis.
The session consisted of a speech from HSBC Holdings Chairman Stephen Green followed by a candid Q&A session with the audience.
In his speech, Mr Green professed his support for the market-based economy and shared his proposal for incorporating a value-based model into the financial market and corporate governance. He also posited a blueprint for infusing good values into stakeholders.
Mr Green argued that the market-based model is still the best model around for economic growth. However he noted the need to trim the excesses of the model while preserving its dynamism.
Mr Green believed that overconfidence in the financial instruments and risk management models as well as a misplaced faith in market efficiency have created what is known as a ‘Casino Capitalism’ (to borrow a term coined by Susan Strange, he noted). This behavior had introduced volatility in the world economy as greater risks were taken.
Despite the financial market bust being the root cause of the economic crisis, the financial industry is still needed to drive innovation and change, especially in human capital and technology. Bearing this in mind, the crisis has produced the impetus for reassessing the role of financial markets and the key players.
Mr Green then shifted focus in his speech to enabling good values in corporate agenda. He noted that many corporations are focusing too much on pursuing short-term gains without considering long-term impacts. He stressed that the real role of corporate leadership is to maximise sustainable shareholder value. He urged business leaders to take the lead and assess the role of corporate social responsibility (CSR) at a deeper level for greater integration.
Wrapping up his speech, he asserted that delivering good values is not just the role of some regulatory and compliance processes, but also falls on individuals. Employees need to work for more than just monetary gains and corporations need to educate employees on ethical values while providing a supportive environment for them. This will produce what Mr Green called, ‘a collection of citizens’ which can contribute to a sustainable business.
Following Mr Green’s speech, moderator Barry Desker initiated the Q&A session. Three main themes emerged as potential solutions for using good values in building a sustainable growth model: the role of business schools in inculcating good values, increasing gender diversity in corporate boards, and introducing spirituality to promote better leadership. Commenting on the role of business schools in supporting CSR initiatives in businesses through ethics courses, Mr Green welcomed this initiative as a step in contributing to improving the ethical values of business leaders and employees.
The second theme was on increasing gender diversity in corporate boards to improve decision-making. Mr Green agreed that there should be positive discrimination to include more women on directors’ board. He believed that the discussion from a gender-mix board is of a higher quality. However, he cautioned that board members should also be selected based on merit and experience, not just on gender.
The last theme was a question on whether spirituality can lead to better leadership by emphasizing on a shift away from profit-maximization. Mr Green pointed out that leadership is not about religious guidance but rather about a common recognition that involves understanding the intricacies of human beings while bringing people together to achieve a common goal.
