Corporate Governance is for Society, not just for Corporations

Corporate Governance 1992



“Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society.” (Sir Adrian Cadbury, UK, Commission Report: Corporate Governance 1992)

Thanks to Ashraf Gamal for the impetus this morning to pen this brief blog.  See his original LinkedIn article here.

The point being made here is that corporations are part of society, not separate from it, and therefore are part of a fabric of stakeholders and stakeholder interests. Corporations have as much responsibility for their stakeholders and the environment (beyond the operating environment) as they do to their owners, shareholders, employees, and strategic partners.

For the 21st century corporation, it’s not just about the balance sheet, it’s about balance generally. It’s impossible to disaggregate corporations from the environments they occupy. They are integral to that fabric. Hence Judge Mervyn King’s and the International Integrated Reporting Council’s (IIRC) work on Integrated Reporting (<IR>) which encourages corporations to report not only about their often impenetrable balance sheets, but also about what they actually did, how they reached their decisions, and what shared priorities they set as part of that business planning.

The approach can be the catalyst, therefore, for corporations and corporate Boards to think and plan in more integrated ways, taking cognisance of their environments, their stakeholders (beyond shareholders and owners), their partners and other “dependants,” setting out their strategic plans as part of that fabric. It encourages broader Boardroom deliberations and openness of thought, which inevitably will lead to otherwise previously unseen opportunities.

For more information on Integrated Reporting and integrated thinking in the Boardroom, please don’t hesitate to contact Charlie Helps directly.

About The Editors

The Governance Advisory Practice is a team of corporate and clinical governance experts all of whom have significant personal experience gained at Board level in the public and commercial sectors.

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