Corporate Governance
The responsibilities of corporate managers guard the rights of the shareholders through policies and control structures called corporate governance (Kurawa & Abdulrahman, 2014). According to Duztas (2008), Corporate Governance is an instrument to ensure the well-being, impartiality, transparency and responsibility of shareholders
There is a direct relationship between business governance and public trust, confidence and faith in the organisation. This actually leads to goodwill in the organisation. While governments worldwide pass legislation to protect societies from threats and challenges from occurring or recurring, corporates have higher responsibilities and accountability to stakeholders – the public, governments, shareholders, and their employees. In spite of various legislations, the public does have their own concerns about organisations due to various scandals hitting corporations now and then.
An organisation is judged by both its tangible and intangible assets:
Figure 1.
Tangible and intangible assets of the organisation
The aims of Corporate Governance are to provide a holistic framework to the organisation in order to ensure it remains meaningful to its stakeholders:
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It is to operate and self-govern itself within the regulatory framework set by governments.
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All its economic activities are to be environmentally beneficial to society
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The textile industry at Tiruppur, India, lets the waste into the Cauvery Rivulet, whose water is also used for agricultural purposes. Instead, the industry could have set up an ETP to treat the dyeing material.
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Business houses are to realise that they protect human rights and have huge social responsibilities like supporting the underprivileged, equal pay, sports promotions, building hospitals, etc.
Conventionally, corporate governance protects shareholders’ interests from the pressures of unprincipled executives (Roberts & Van den Steen, 2000). However, in recent years, governance has encompassed much more areas and activities, including the environment. Indeed, sustainability is progressively becoming an important part of the strategies followed by organisations (Iansiti & Levien, 2004),
The Brundtland Report of 1987 of the World Commission on Environment and Development defined sustainability as a concept integrated with environmental, economic and social dimensions. This report helped sensitise governments and business houses to take constructive steps for developing emerging nations, as the members felt that growth could happen only through integrating sustainability with social responsibility.
Scholars have repeatedly demonstrated that corporate governance structure should ensure growth in monetary performance and sustainable performance by backing up larger stakeholder partaking (Rao & Tilt, 2016; Carter et al., 2010; Naciti, 2019).
Also, governments and financial institutions are more than willing to support organisations that show greater sensitivity to sustainable initiatives. The role of the board is not only to maximise the wealth of shareholders but to look beyond the organisation to support and establish an ethical approach. (Burke and Mattis 2013).