NACD Chairman’s Address: Restoring Faith in Capitalism
After a visually stunning acrobatic performance by members of Cirque du Soleil, NACD Chairman and former U.S. Secretary of Commerce Barbara Hackman Franklin opened the 25th NACD Board Leadership Conference with a call to restore public trust in capitalism.
With conference attendees representing nearly all 50 states, all of NACD’s 22 chapters and 10 countries ranging from Kuwait to Jamaica, Franklin noted that “governance is indeed global.” However, her focus on capitalism was focused specifically on the American style of market capitalism. From a historical perspective, capitalism generally falls under attack following economic crises and scandals. The Enron and Worldcom scandals resulted in the enactment of the Sarbanes-Oxley legislation one decade ago. Today, directors are in the process of incorporating the many provisions to come out of the 2010 Dodd-Frank financial reform legislation.
In her speech, Franklin noted that public distrust of business executives is at an all-time high. As such, businesses are operating under the “new normal.” No longer are public companies expected to just make a profit for shareholders. According to the NACD chair, the smartest companies are paying attention to such areas as the environment, sustainability, and diversity.
Franklin listed five ways directors can support a restored faith in capitalism:
1. Be the best [directors] can be.
2. Stress the tone at the top: The critical ingredient for long-term ethical behavior is culture.
3. Build a strong board that values openness and candor.
4. Push for corporate social responsibility actions to be embedded in the company strategy.
5. Stay current: Continuing education for corporate directors is a necessity.
The time to act, according to Franklin, is now. If companies do not step up, the government will step in.