Purpose and sustainability at the heart of ISO 37000
We are living in rapidly changing and challenging times and, more than ever, governing bodies are being called on to ensure that their organizations act with purpose, sustainability and society in mind. Good governance not only builds trust, it improves business performance and contributes to social and environmental integrity. Just published, ISO 37000:2021 Governance of organizations - Guidance, provides organizations and their governing bodies with the tools they need to govern well, enabling them to perform effectively while behaving ethically and responsibly.
Developed by experts and trusted voices from a wide range of organizations in over 70 countries around the world, ISO 37000 provides a single, globally accepted, reference for all kinds of organization, regardless of size, type or location.
Good governance not only fosters an environment of trust, transparency and accountability, it also helps in aligning an organization’s purpose with the interests of society, building strong stakeholder relationships while effectively managing and maintaining its resources. In this way, good governance lays the foundation for long term success of organizations and ensures they contribute to the protection and restoration of social, economic and natural environmental systems.
The organization’s purpose and values, aligned with the sustainable wellbeing of current and future generations should be on the top of governing bodies’ mind.
ISO 37000 provides comprehensive guidance for boards by distilling governance into 11 principles which are the bedrock of successful organizations by helping ensure they are well governed, well managed, and socially responsible.
Figure 1: Governance of organizations — Overview (source: ISO 37000:2021)
At the heart of all organizations is purpose, i.e. a meaningful reason to exist. Values inform both the purpose and the way the purpose is achieved. ISO 37000 sets out guidance to help governing bodies clarify the purpose and values, ensure that strategy is aligned with this intent and ensure value is generated for all relevant stakeholders to strategically achieve purpose in line with the values. The standard outlines how this requires a carefully considered approach to stakeholder engagement, and a systemic, long-term and proactive view of appropriate risk so that the organization remains viable over time.
ISO 37000 also reinforces the critical need for effective oversight, in particular through a clear-cut internal control system and reliable assurance processes.
Accountability at all levels is another principle at the heart of good governance: neither the members of the governing body nor those to whom power has been delegated stand above the law. The governing body is ultimately accountable for the actions and omissions of the organization, hence governing bodies need to ensure they define roles and responsibilities and have a well-functioning reporting and accountability system in place.
ISO 37000 further stresses that leaders set the tone for an ethical organizational culture, need to ensure the strategic and responsible use of data and ensure that decisions are transparent and aligned with broader societal expectations.
Dr. Victoria Hurth, Co-Convenor of the ISO group of experts that developed the standard said that effective, state-of-the-art organizational governance goes beyond pursuing self-interest and complying with legal obligations.
"It is about sensing and anticipating what might happen and driving performance towards a clearly defined and socially relevant purpose," she said.
"We are fast entering a new governance paradigm where stakeholders are demanding highly effective governance to drive and assure genuinely sustainable long-term value. This is the first ever global consensus standard on governance that is applicable for all organizations, in all countries. It therefore can serve as the blueprint for governing bodies to navigate complexity so that a high performing socially relevant purpose can be achieved in a sustainable, ethical and responsible way" she said.
ISO 37000 defines good governance as a human-based system by which an organization is directed, overseen and held accountable for achieving its defined purpose in an ethical and responsible manner. The standard clarifies the distinct but integrated roles that governing bodies and management play in an organization and establishes common language, principles and practices that apply across all organizations in all jurisdictions.
Dr. Axel Kravatzky, co-convenor, added: "The remit of many governing bodies is ever expanding and increasingly complex. ISO 37000, however, will help them to navigate and fulfil this through an integrated governance framework and system which empowers all governing groups and organization actors."
ISO 37000:2021 Governance of organizations - Guidance was developed by the ISO technical committee ISO/TC 309, Governance of organizations, whose secretariat is held by BSI, the ISO National standards Body for the UK.