Much of the recent debate on how to strengthen corporate governance, amid the spate of recent accounting scandals and high-profile big business failures, has tilted the debate too much towards the short term—at the expense of a company's longer-term outlook, investment strategy, and, ultimately, its ability to deliver robust profitability in the years and decades to come.
Stakeholder expectations
After all, some investors are more attuned to a company's performance over the long haul. One group in particular comes to mind: institutional shareholders of retirement funds—that very investor group that is the focus of recent reforms in the US to strengthen oversight and offer greater protection from fraud.
At the same time, I don't see a company's ability to "govern," if you will, short-term expectations on a quarterly basis as necessarily at odds with a company's ability to see through its long-term vision.
There are a variety of ways to reduce the conflict between sometimes widely varying stakeholder expectations. One way is through employee shareholder plans, which can help bridge the gap between the different expectations of employees and those of investors.
Long-term view needed
Keeping the long-term view alive in the debate on widening corporate accountability is essential if global corporations such as ours—TotalFinaElf SA operates in 120 countries—are to also meet the rising expectations of other stakeholders to implement a sustainable development strategy.
By its very definition, this strategy is a decades-long pledge to continuous improvement, such as our commitment to reduce greenhouse gas emissions 20%/tonne of oil produced over 15 years to 2005.
Such related aims to reduce emissions, via reducing a company's energy consumption, researching the feasibility of sequestering CO2 in oil reservoirs or altering industrial processes, can only bear real fruit over several years.
It goes without saying that the corporation of the 21st Century bears a responsibility for balancing these aims to respect the environment with social equity and profitability, which to me is the definition of that difficult-to-pin-down concept, sustainable development.
Local community needs
Of course, in capital-intensive businesses a long timescale is an essential benchmark for corporate accountability—and that accountability must also take into close consideration the local community.
In the business of finding and producing oil and gas, our relationships with local communities must be held in close account, since our work sites are often located in the developing world.
We may be operating an oil field for as long as a generation. This often means we must consult closely with local communities to support relevant programs so citizens can more fully benefit from the lift in economic circumstances now and far into the future.
"Much of the recent debate on how to strengthen corporate governance, amid the spate of recent accounting scandals and high-profile big business failures, has tilted the debate too much towards the short term—at the expense of a company's longer-term outlook, investment strategy, and, ultimately, its ability to deliver robust profitability in the years and decades to come."
