One of the newest terms in the corporate lexicon is ‘stewardship’. To understand what it exactly means, we have to dig a little deeper.
Meaning of Stewardship
The dictionary meaning of stewardship is “the conducting, supervising, or managing of something, especially the careful and responsible management of something entrusted to one's care” [www.merriam-webster.com]
The origin of the term goes back to when a ‘steward’ was a household servant and his sole duty was to bring food and drink to his master's dining hall. In course of time the responsibilities of a steward were extended to include other domestic services and household management needs. Further down the line, commercial stewardship evolved and providing service to passengers on ships, trains, flights or luxury buses and to guests in hotels or restaurants were brought within the ambit of the meaning of stewardship. Today the concept of stewardship has also been embraced by other fields (it may seem completely unrelated though) like economics, environment, health, property, information & technology, theology and so on.
Stewardship vs Sustainability
Both the words are often used interchangeably, but they are not identical concepts. There is a thin line of difference between the two. #Sustainability means ‘meeting current needs without sacrificing the ability of future generations to meet their own needs by balancing environmental, economic and social concerns’ while #stewardship means ‘the careful and responsible management of something entrusted to one's care’. So, while the former authorizes corporations to ‘use’ the resources and at the same time to ensure that the right of the future generations to use the same resources is not jeopardized, the latter essentially makes corporations ‘caretakers’ of the valuable resources. They are not only required to manage them but also to ensure that the same are passed on to the future generations in the same form if not better.
Stewardship in business
And that brings us to our topic for discussion. Today, stewardship is one of the terms in the ever-expanding corporate lexicon. Stewardship would ideally mean an ethical approach to responsible planning and management of resources. It is generally considered to be the acceptance of responsibility to safeguard the valuables of others. In terms of corporate stewardship, it would ideally mean accepting the responsibility of taking care of the organization or property by those who are entrusted with the duty. Going deeper into it to find the implication, it would mean that those who are entrusted with the wealth or valuables of any kind by others have an obligation to hand those assets down in a shape better than they themselves inherited them. That would imply being responsible beyond one’s own interest (selfless), and such responsibility extending beyond one's lifetime (long-lasting). Thus, in today’s corporate scenario, stewardship would refer to taking responsibility for the business of the company and the effects it has on the world around and on the generations to come. It is taking a humane view and adopting a sustainable approach to business.
The traditional concept of ‘shareholder wealth maximization’ has been at the root of many corporate scams, resulting in the creation of a ‘credibility and trust crisis’ for corporations generally. The effect of these have been a paradigm shift towards ‘better corporate governance’, increased compliances, enhanced transparency and wider stakeholder participation. The concept of stewardship is the newest entrant to the list of models being researched upon by champions of corporate sustainability in pursuit of responsible business behaviour.
For small and medium-sized businesses, the concept of corporate stewardship may seem not to be helpful in their day-to-day struggle to survive. But as corporations grow bigger, stewardship concept needs to be intertwined with their business ideology for them to thrive.
Examples of stewardship
The following are some examples of application of the corporate stewardship approach:
i. using renewable resources and biodegradable materials,
ii. producing products that are not harmful to the environment,
iii. using email communication to reduce paper consumption,
iv. reducing and recycling of waste,
v. ordering items in bulk to cut down on the need for repetitive shipping,
vi. considering environmental effects of new inventions and innovations,
vii. holding all kinds of meetings in hybrid mode to cut down the necessity of
unnecessary travel by participants located at different locations (who can join via
viii. encouraging pool car facilities for employees to promote the twin objective of intra-
organisation social cost and reducing carbon footprint,
ix. having captive power generation unit using renewable energy sources
x. promoting the conservation of energy like fuel, electricity etc.
Breaking down the concept
To understand the concept of business stewardship better, we can break it down to a few sub-concepts as follows:
Corporations around the world are increasingly beginning to realise the negative impacts of their businesses (like climate change, deforestation, water shortage, contamination of water, increased pollution, unequal distribution of wealth and so on) and are showing active interest on working to alter the same and being more responsible for their actions not only in the interest of their current and future stakeholders but also in the interest of the society. This approach is called corporate stewardship.
In the wake of the increased concerns about the environment, many businesses around the globe have realised that it is important for corporations to be environmentally sustainable. This has prompted them to realign their businesses in a more sustainable way. This approach is called environmental stewardship.
The human factor is very important in the success of businesses. Managing the human factor, and the various stakeholders amongst them is vital for long term sustainability. This includes employees, customers, suppliers, partners and local community, and managing the interactions with them and in between them is an important part of business stewardship. Proper codes of conduct and communication manuals must be developed in the interest of business. This is service-oriented stewardship.
It may be noted that in India, this concept of corporate stewardship and environmental stewardship forms the basis of the mandatory provisions of Corporate Social Responsibility (#CSR) u/s 135 of the Companies Act, 2013. There are also various laws that have been enacted to make environmental and service-oriented stewardship mandatory, like the environment protection laws, labour laws, consumer protection laws, and so on. However, when we talk of ‘stewardship’, we are implying compliance beyond what is mandatory.
Costs of stewardship
Taking up a corporate stewardship approach definitely comes at a cost. But this should not be a deterrent to taking up stewardship. In certain cases, the company can offset the same from tax-credits, if any. A company can also benefit of saving when using renewable energy as part of stewardship. In jurisdictions where carbon tax is applicable, stewardship may also help a company save on the same.
It wouldn’t be wrong to say that all types of businesses engage in some activities that have negative environmental consequences, but not all of them take up stewardship. Adopting the stewardship model can definitely help them find more sustainable practices, while at the same time improve its goodwill and reputation in the society in general and among the c
onsumers in particular as also save money in certain cases. As per the stewardship model a business leader should be like a responsible steward contributing to the wellbeing of his customers, suppliers, employees as well as community members. Corporations must act ethically and responsibly for the common good of all stakeholders, the present as well as the future and the planet. Those organisations, that haven’t yet implemented the Stewardship Model, must consider doing it now.