IoD harps on enterprise value creation for business sustainability 

As the COVID-19 pandemic disruption intensifies, the Institute of Directors (IoD) Nigeria has urged businesses to adapt to enterprise value creation for sustainability.

The institute noted that the balance among three key sources of enterprise value – financial productivity, resilience and society – had been shifting over time.

This, the group said, had made companies whose strategies and assets were over-indexed on efficiency, struggling and creating an imbalance that the digital era had made more obvious.

At this year’s IoD Nigeria biennial lecture, the institute’s President and Chairman of Council, Chris Okunowo, said reconfiguring to compete successfully in the 21st century, required a business to flex and upgrade critical capabilities, such as strategic direction-setting, resource allocation processes, and governance, which together enable the deployment and recalibration of operating assets.

Stretching these same capabilities, Okunowo said, was also crucial for leaders if they are to make their companies more resilient and more purposeful contributors to society to avoid the destruction of enterprise value.

According to him, companies with the objectives of creating and growing enterprise value in today’s value creation ecosystem must fully understand its topography and the trade-offs, tensions, and balancing acts that are inherent within it.

The IoD boss advised leaders to analyse and re-invent their planning processes, reframe their strategies, and revise their ways of working by creating new supply chains, new products, new people policies, and new standards of transparency in decision-making.

He urged organisations to recognise that disruption and value creation are inextricably linked, and while disruption is continually posing risks to corporate value, he added that it was also presenting new opportunities.

In his presentation on the theme, ‘Enterprise Value Creation’, Professor of Law and Chair Emeritus, International Integrated Reporting Council (IIRC), Mervyn King, charged directors of boards on concise, accountable and understandable business reporting in line with sustainability standards for improved enterprise value creation.

For proper accountability, he said directors owe their duties to the companies and not shareholders, adding that for directors to be accountable, they also have to be understandable.

He stressed that the quality of the information of reports was a duty owed by directors, and urged mindset change at the board and senior management level with a symphony of resources and relationships.

Prof. King added that enterprise value today would be achieved by embedding sustainable development goals into business models and recognising the impact of financial, social and environmental factors on companies.