Produced by: Tarun Mishra Designed by: Mohsin Shaikh
Nandan Nilekani, co-founder of Infosys, has highlighted the critical importance of corporate governance in the success of organisations. In his insightful address during an event hosted by equity management platform, Qapita, Nilekani underscored how governance is not merely a procedural obligation but a strategic asset that can significantly impact a company's performance and reputation
Nandan Nilekani delved into the idea that corporate governance is not just an afterthought but a top priority for organisations. He elaborated on how Infosys has woven corporate governance into its very fabric, shaping its growth and development over its four-decade journey
Nandan Nilekani pointed out that governance directly affects financial performance. Drawing from examples in the global market, he mentioned that companies excelling in governance tend to outperform their peers. He said, “If you look at the S&P 500, you will find that the companies that are on top in corporate governance, outperform in the stock market, while those who have a crisis, underperform.”
He cited significant corporate crises such as Enron and Lehman Brothers, underscoring how governance lapses were critical factors in these major collapses. He also cited examples of companies in India which faced crisis because of poor governance, such as Satyam Computers
Nandan Nilekani said, “If you look at the CEOs who have lost their jobs in public markets, it's not often due to financial performance. It's something completely different, something to do with the governance, the behaviour and so on.” He discussed how governance now encompasses environmental and social considerations, forming the widely recognised ESG (Environment, Social, and Governance) framework
Highlighting Infosys's contributions, Nilekani shared the company's impressive achievements in environmental sustainability. He pointed out that Infosys was carbon-neutral by 2020, far ahead of the Paris Agreement timeline. Nilekani said, “We have our own 60-megawatt solar plant, so we generate huge amount of solar power.” He also added that Infosys campuses are plastic free and equipped with full rainwater harvesting
Beyond environmental endeavours, Nilekani explained how Infosys actively engages in numerous social initiatives through its foundations. “We do a huge amount of work around the world and it's really happening through our core values,” he said
Nilekani debunked the misconception that stringent governance hampers business growth. He cited Infosys as an example of a company that maintains robust financial performance while upholding high governance standards. He emphasised that if someone had invested ₹10,000 in the Infosys IPO in 1993, it would have been worth 20 crores today. “A current market cap is $72 billion a share. Price has moved up 212% in the last five six years and we have zero debt,” Nilekani added
Another vital aspect of Nilekani's address was the emphasis on founder cohesion. He highlighted that shared values, a strong leader, and a common sense of purpose among founders are crucial for long-term success. Nilekani encouraged start-ups to prioritise founder cohesion as they navigate their entrepreneurial journeys
Nilekani acknowledged the unique challenges faced by modern start-ups in a rapidly evolving business environment. He cited concerns related to inconsistent risk management, inadequate succession planning, and the need to reinforce value systems within start-ups. Nilekani said, “Often there is no succession planning. Suddenly the founder leaves and then you don't know what to do next."
According to Nandan Nilekani, Infosys has firmly embedded governance principles in its foundation, making it an integral part of the company's culture. Nilekani discussed how governance was a founding principle at Infosys, shaping its remarkable journey over more than four decades. ”At Infosys, governance was by design. It was not an afterthought. It was part of the founding principles,” he said
In conclusion, Nilekani underscored that governance is not merely a legal obligation but a strategic advantage for companies. He emphasised that strong governance fosters trust among employees, customers, and investors, enhancing a company's reputation. Nilekani urged Indian start-ups to view governance as a critical component of their journeys, as it can be a defining factor in their future prosperity