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Governance

How a company is governed & managed

Governance Issues

1. Board Composition and Effectiveness

  • Diversity and Independence: A diverse and independent board is seen as better able to oversee executives and represent shareholders' interests.
  • Skills and Expertise: The board's collective skills and expertise should align with the company's strategic direction.

2. Executive Compensation

  • Alignment with Performance: Executive pay should be closely aligned with the company's performance, incentivizing long-term value creation over short-term gains.
  • Transparency: Compensation policies should be transparent and understandable to shareholders.

3. Audit and Risk Management

  • Internal Controls: Effective internal controls are essential for accurate financial reporting and compliance with laws and regulations.
  • Risk Management: Companies should have comprehensive risk management practices in place, including those related to cybersecurity and data privacy.

4. Shareholder Rights

  • Voting Rights: The rights of shareholders to vote on important matters, such as the election of board members.
  • Shareholder Engagement: Open channels for shareholder communication and engagement with the board.

5. Ethical Practices and Compliance

  • Code of Conduct: A clear code of conduct that outlines expected ethical standards and behaviors for employees and management.
  • Compliance: Adherence to laws, regulations, and standards, including anti-corruption measures.

6. Sustainability Integration

  • ESG Strategy Integration: How well a company integrates ESG considerations into its strategy and operations, reflecting a commitment to sustainable development.

7. Transparency and Reporting

  • Disclosure Quality: The comprehensiveness, clarity, and accuracy of disclosures related to financial and non-financial performance, including ESG aspects.

A corporation's purpose, the role and makeup of boards of directors, shareholder rights, and measuring corporate performance are core elements of corporate governance structures.
‍HBR, Nov 2016
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UN Sdgs

United Nations SDGs and Governance

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Goal 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
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Goal 5. Achieve gender equality and empower all women and girls
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Goal 6. Ensure availability and sustainable management of water and sanitation for all
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Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
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Goal 10. Reduce inequality within and among countries
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Goal 12. Ensure sustainable consumption and production patterns
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Goal 13. Take urgent action to combat climate change and its impacts[b]
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Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
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Goal 17. Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development
UN SDG Wheel