Corporate Governance and Sustainability
This article should conclude on how sustainability serves as a dimension of corporate governance, but features and functions leave it hanging.
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So “mundane” reading will continue because the previous edition's statement “to conclude on the topic” has been broken to cover similarly important points that would otherwise be missed.
The issue is having the luxury of a page that gives the impression that it can carry everything at once, but this is completely off-centre. So please pardon me, but exciting reads await. For now, let us stick with what looks to be a textbook conception
When it comes to running an organisation, both the features and functions of corporate governance demonstrate the practicality and provide optimal operational efficiency, this time not to maximise the abundance of business landlords (shareholders) or certify a monitoring scheme for managers whose interest is to satisfy landlords but to share in the liability of how a firm's engagements influence the biological environment and stakeholders such as societies and employees.
According to A.C. Fernando, the preceding reason is based on normative and theoretical perspectives that explain theories such as the stakeholder theory of corporate governance, which has evolved from a blend of behavioural science, business ethics, economics and stakeholder model, to include ethics of care, the ethics of fiduciary relationships, social contract theory, theory of property rights, and theory of stakeholders as investors, communitarian ethics and critical theory.
These have formed the cornerstone of business ideas that corporations work intimately inside societies and communities and cannot afford to ignore the impact their activities have on the planet's economic, environmental, and social aspects.
As a result, corporate governance has changed from being concerned with “in what way companies are led and organised” into wider “sustainable corporate governance” challenges.
Challenges
The ambiguity surrounding corporate governance stems from how critics and organisations define it. The defining aspects range from discussing solely stakeholders to focusing on all stakeholders' interests.
Others regard it as a critical approach for a country to achieve long-term economic development, while others see it as a corporate strategy to construct or re-establish a long-term favourable image.
It may serve as a compelling cause to build a framework for "new" institutions of control in countries such as Ghana, while for others, it adds another dimension to corporate ethics, social responsibility, and business sustainability.
Therefore, corporate governance is established and contextualised to suit the user's requirements. However, according to Fernando, "corporate governance is a means to an end, the end being long-term shareholder value."
"Thus, all authorities on the subject are one in recognising the need for good corporate governance practices to achieve the end for which corporates are formed," he concluded.
In order to attain corporate governance practices, several crucial and critical targets must be considered as listed below:
Crucial and Critical
• Differentiating between the roles of the board of directors (BoD) and management
• Board composition and associated concerns
• Separation of the CEO and Chairperson positions
• Is it necessary for the board to form committees?
• Board appointments and re-election of directors
• Remuneration for directors and executives
• Disclosure and auditing
• Protecting shareholder rights and expectations
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• interaction with institutional shareholders
• Should investors have a say in a company's social responsibility?
Attending to these vital and critical issues may pave the way for strong corporate governance to be drafted, instituted, and implemented.
Basics - Good Corporate Governance
Good governance responds to the organisation's current and potential demands, it is practical for policy design and decision-making and considers the best interests of all stakeholders.
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The key doctrines underpinning corporate governance rules must reflect their critical role in achieving wider economic, environmental and socially positive targets.
The headings below explain each of these principles.
Transparency
Transparency necessitates the presentation of information in easily understandable formats, which is free and direct availability to those who may be affected by government policies and practices, as well as the repercussions that result from them.
The board should ensure that the information provided is objective and balanced in terms of the organisation's financial, environmental and social governance positions on its performance and perspective on those positions.
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Participation
To ensure admirable governance, all stakeholders must engage, either straight or through legitimate representatives.
Participation must be well-informed and organised, with a focus on freedom of expression and concern for the organisation's and society's overall best interests.
The board of directors should be responsible for ensuring that the organisation, its shareholders and other key stakeholders engage in acceptable dialogue and again respect the interests of its shareholders and other key stakeholders within the context of its primary purpose.
Equity and Inclusivity
An organisation that enables its stakeholders to preserve, increase or generally boost their well-being conveys the strongest message about its mission and value to society.
The board is in charge of safeguarding shareholder interests and ensuring that all stakeholders are treated fairly.
It shall provide and ensure that all shareholders and stakeholders have a platform to express their concerns and seek redress for any violations of their rights.
Timing
To be deemed outstanding governance, organisations and their procedures must be intended to serve the best interests of stakeholders in a reasonable timescale.
The board must ensure that all decisions affecting the business and its stakeholders are addressed in a timely and efficient manner.
The writer is journalist whose primary interest are minimalism, sustainable business, photography, society and culture, sports and tourism. email: amaesonmensah@gmail.com