Corporate governance represents the set of rules, practices and structures through which a company is guided, managed and monitored.
Important notes on corporate governance
- Appropriate governance contributes to the creation of companies that are more stable, transparent and respectful of the needs and values of all stakeholders;
- Corporate governance encompasses the processes through which a company’s objectives are established and pursued in the context of the social, regulatory and market environment;
- Governance is one of five categories that are analysed and rewarded by B Corp certification according to criteria such as ethics and transparency.
Corporate governance is a fundamental pillar for the success and sustainability of companies. It is based on key principles that guide ethical and responsible behaviour within a company. These principles include fairness, transparency, managerial accountability, risk management and protection of the interests of shareholders and other stakeholders. Good corporate governance consists of a system of leadership and monitoring that aims to ensure compliance with these principles in order to optimise an organisation’s performance and protect the interests of all stakeholders.
Corporate governance involves a set of actors, including the board of directors, management, shareholders and specialised committees. The board of directors is responsible for overseeing corporate activities and making strategic decisions. The corporate management is responsible for the day-to-day management and implementation of decisions taken by the board.
The adoption of good corporate governance can lead to numerous benefits. First of all, it helps to ensure the long-term efficiency and sustainability of the company. Moreover, it promotes investor confidence, thus improving access to financial capital. Finally, effective governance can help to prevent irresponsible or unethical behaviour by corporate executives.
Organisations such as the Organisation for Economic Cooperation and Development (OECD) and stock exchanges around the world have developed guidelines and principles for effective corporate governance. These principles provide a framework for companies to improve their governance practices and increase investor and public confidence.