Businesses should serve the interests of shareholders, stakeholders and society, and must be for both profit and purpose.
This was pointed out by former Managing Director of Khazanah Nasional Bhd, Tan Sri Azman Mokhtar, during his special lecture on “Profit with Purpose: Building Sustainable and Inclusive Businesses in an Age of Turbulence” held at the WOU main campus today.
He shared that the past conventional thinking was that businesses must make money for shareholders, with little focus on the social obligation to stakeholders, including staff, suppliers, customers, society at large and the environment.
Tan Sri Azman highlighted, “The role of business is just not profit, but to do no harm and some good. Hence, profit with purpose.” He cited providing inclusive higher education, affordable housing, sustainable businesses and impact investing as examples of doing good, and doing no harm through responsible business and responsible investing,
He explained that the 2008 global financial crisis, poverty, inequality, climate crisis, and the issue of fairness and justice have led to a demand for greater responsibility and sustainability in business and finance. “The world has become very turbulent due to overconsumption, irresponsible businesses, irresponsible citizens, and the increased frequency and amplitude of financial crises.”
In his call for action, he shared the experiences of Khazanah during his 14 years there. He said that they not only created profit but also undertook economic regeneration by creating jobs, new economic corridors, new capabilities, new networks, new knowledge, and building regional businesses like Axiata and CIMB. “We did it in a balanced manner so as not to crowd out the private sector or prevent them from operating well.”
As for societal value, he said Khazanah undertook CSR initiatives like establishing Foundations, scholarships, and think tanks to confront public issues. “The right mandate is to ‘Profit with Purpose’ and to build true value in terms of financial, economic and societal returns. In real economy, there must be capital regeneration, job creation, venture capital.”
Tan Sri Azman also spoke about the need for tri-sector leadership and collective action to address the colossal problems in the turbulent world today, clarifying, “You need to understand not just the private sector but also how the government works and to have empathy for the public sector and social sector. Those in the public sector must in turn understand how business works, and how civil society, NGOs, think and work.”
He declared, “Finance must serve the real economy, and the real economy should serve society,” explaining that real economy includes production, jobs, raising a family, and retirement. He said the link between real economy and society has been fractured by factors like corruption, adding, “There is a need to reclaim finance to serve the real economy, and the real economy to serve society as a whole.”
The lecture, organised by the George Town Institute of Open and Advanced Studies (GIOAS), was attended by over 200 people, including WOU Board of Governors Chairman Tan Sri Dr Koh Tsu Koon, Vice Chancellor Prof Lily Chan, representatives from institutions of higher learning and industry, and the staff and students of WOU.
During Q&A, Tan Sri Azman emphasised that education should be more of a social business for WOU, with profits recycled back into the business and surplus used to help students as the focus must be on social return.