In the final entry of this series, we explore the governance component of environmental, social and governance (ESG) reporting. By examining a company’s internal procedures, leadership structure and potential conflicts of interest, good governance policies can help keep you out in front of potential violations or sanctions.
In prior installments, we discussed the importance of self-reporting on both environmental and social impacts. Now, we’ll dive into how governance ties both of these together to help identify your company’s risks while also presenting opportunities.
Corporate governance: a brief history
Corporate governance covers the structure, principles, processes and other mechanisms used by the Board of Directors to manage and oversee a corporation. While the practice of corporate governance can be traced to the 17th century Dutch Republic (ExchangeHistoryNL), its more modern incarnation grew out of the Wall Street Crash of 1929 and evolution of management theory after WWII. Despite that long history, the term “corporate governance” first appeared in the Federal Register in the U.S. in 1976, according to the European Corporate Governance Institute ECGI. Since then, the field of corporate governance has evolved considerably around the world.
“The financial crisis can, to an important extent, be attributed to failures and weakness in corporate governance arrangements.”
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