Strategic Corporate Governance
Promoting Good Business Practices and Corporate Citizenship
Corporate governance includes ethics, transparency, compliance and risk management activities in order to provide accountability to business stakeholders. However corporate governance activities can be utilised as part of a business’ corporate social responsibility strategy in order to show the company as an attractive investment, supplier or joint venture partner or as an all-round good corporate citizen.
Corporate Ethics – Greed is Not Good
Corporate ethics and ethical business practices require managerial support in order to successfully be adopted into everyday company practices. Codes of ethics for corporations should detail the company’s policies in relation to ethical treatment of all stakeholders including staff, suppliers, customers and the wider community. A guide to creating a code of ethics can be downloaded from the Institute of Business Ethics.
Public disclosure of corporate codes of ethics can assist community stakeholders to trust that businesses are acting in an honest and transparent manner in all dealings. A 2008 poll undertaken by MORI, found that 85% of consumers would be inclined to have greater trust in a company, if there was transparency and honesty in relation to the companies policies. This greater trust level would arise even if the consumer was not in agreement with all of the company’s policies.
Legal Compliance
In most jurisdictions there are many laws and other non-law treaties and agreements that mandate that business operations are carried out in a non-harmful manner. This include specific treaties with indigenous populations relating to use of traditional land, laws requiring safe workplaces and providing measures to ensure that companies do not discriminate when employing, legislation and guidelines relating to environmental impact and specific pieces of legislation such as the Sarbanes-Oxley Act which attempt to improve corporate governance procedures.
Sarbanes-Oxley Compliance
Large publicly listed companies and accounting and audit service providers in the United States are required to comply with the Sarbanes-Oxley Act (2002), enacted after the corporate collapse of Enron, which resulted from poor standards in corporate governance and audit practices.
Sarbanes-Oxley compliance requires annual filing of a disclosure document with the Securities and Exchange Commission. Amongst other requirements, the Sarbanes-Oxley Act requires that the financial statements are certified by the Chief Executive Officer and Chief Financial Officer of the disclosing company. Auditing practices are also subject to stringent legislative controls under the Sarbanes-Oxley Act.
Risk Management
There is an inherent amount of risk to every human venture, risk management policies and procedures enable companies to limit the chance that their business operations will case unnecessary or undue harm to stakeholders, the environment or the value of the company’s brand in the marketplace.
Transparency in risk management procedures can be a good corporate social responsibility activity as they can lead to increased consumer confidence in the company. This is particularly the case when the actions of the company may have a detrimental effect on the environment or health of the society in which it is situated.
Business plays a large role in the success of any economy and corporate social responsibility requires that business also takes part in society. A strong corporate governance strategy can support other corporate social responsibility activities such as community business partnerships and provide a foundation for improved stakeholder relations and a potential for an improved market share.
Corporate Governance Is Important
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As A Corporate Social Responsibility Activity
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