The right time and place for better corporate governance

As boards assess what they can do better in Gulf region corporate governance issues must be addressed, and this includes the promotion of women to senior positions.

The DIFC is a leading light among regional institutions in adhering to the practice of good corporate governance. Jaime Puebla / The National
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In the Gulf region of the Arab world, we have already witnessed a considerable shift in attitude towards corporate governance and ethical business behaviour, sparked in part by the global financial crisis of 2008.
As the effects of the downturn reverberated across the region, boards and their directors began to analyse and assess how they could protect their companies. As a result, there have been calls for greater accountability and transparency to facilitate the creation of a genuinely competitive and sustainable business environment.
To fully capitalise on the current growth of this region, governance models and systems are an absolute necessity. Well-defined shareholder rights, a solid control environment, high levels of transparency and an empowered board of directors make a company more attractive to investors, lenders and customers, and inevitably more profitable.
Just last year, research from the Journal of Management & Governance found that companies with strong or improving corporate governance outperformed those with poor or deteriorating governance practices by 19 per cent over a two-year period.
Indeed, recent research by the United Nations and Accenture states that 93 per cent of respondents are convinced that environmental, social and governance issues are important to the future of their business.
However, the same study also found that chief executives believe the economic climate and a range of competing priorities create obstacles to embedding governance at scale within their respective companies.
This is where organisations such as the Pearl Initiative can play an active and constructive role.
The principles of the UN Global Compact – the world's largest corporate sustainability initiative with more than 8,000 business participants in 145 countries – have spurred thousands of companies around the world to embed sustainability into their organisations. For example, Principle 10 of the Global Compact states that "businesses should work against corruption in all its forms, including extortion and bribery".
It is now an ideal time to bring them to attention in the Gulf region and the wider Middle East.
It is this drive that has led to collaboration between the Pearl Initiative and the UN Global Compact, with the objective of helping to instil best practices as a means of safeguarding the success of our economies.
The aim of this partnership is to facilitate the creation of locally-produced programmes designed to help businesses in the Gulf region navigate increasingly complex risks through regionally relevant responsible practices.
Through reinforcing positive regional experiences, more companies will be encouraged to embark on a journey to raise business standards.
This new partnership with the Global Compact will lead to the creation of a number of joint programmes designed specifically for the Mena region, based on improving governance, diversity, transparent reporting and anti-corruption while championing the universally accepted Global Compact principles.
As an important part of these joint efforts, the Pearl Initiative and the Global Compact is launching later this year a major GCC-wide initiative "Women in Management", based on the framework of the UN Women's Empowerment Principles.
The programme will combine research with practical advice and case studies to understand the perspectives of women in senior management to provide context and advice for their peers looking to advance through the corporate ranks alongside their male counterparts.
The number of women holding ministerial-level positions and other roles in public life has increased significantly in the past decade, and we are seeing more women exert a strong influence on their communities. That said, women are still vastly underrepresented in the workplace overall.
According to the World Chambers Congress 47 per cent of the population in the Gulf countries are women, yet female participation stands at just 19.2 per cent.
To address the reasons behind the disproportionate statistics, we must deepen our understanding of the underlying issues and then develop approaches to increase the number of women in senior leadership positions to the benefit the economies of our region as a whole.
Ultimately, the vast majority of business decisions and actions involve local challenges and local stakeholders.
The Gulf region's business community must continue work to leverage both international and regional expertise in order to combine global best practices with locally-relevant imperatives for the benefit of all our economies. Although one size does not fit all, the principles of the Global Compact provide important pillars of good corporate governance, and the Pearl Initiative will act as a guide for companies to consider when building their governance frameworks.
Badr Jafar is the founder of The Pearl Initiative and the managing director of the UAE's Crescent Group