The research by the WBCSD explores the board’s role in creating long-term value and pays special attention to how environmental and social risks and opportunities affect the corporate governance process.
The Report addresses the common misconception that the duty of directors is to solely maximize shareholder value and how this ideology has led to short-termism.
The paper outlines what aspects and practices of corporate governance promote the long-term sustainable success of a company as well as generate value for all stakeholders, including shareholders.
WBCSD highlights the stateof corporate governanceacross twelve jurisdictions: Brazil, China, France, Germany, Hong Kong, Japan, The Netherlands, Singapore, South Africa, Thailand, the United Kingdom, and the US. The research also focused on publicly available information from a sample of 56 companies across these 12 jurisdictions, with a focus on the food and agricultural sector.
The Report finds, that in the international corporate governance paradigm, South Africa has emerged as a trail blazer, with its King IV Code providing an extensive and robust corporate guide to promoting inclusive capitalism, integrated thinking, stakeholder inclusivity, and corporate citizenship.
Singapore, UK, France, Netherlands, have also addressed the need for boards to adopt a long-term view of value creation. London and Singapore Stock Exchanges have addressed the investor demand for better integration of ESG into business practices and are now requiring more reporting and improved transparency.
Despite regulatory advancements, it is still in the hands of the company to truly integrate the corporate governance principles, as the most common legislation around corporate governance practices is through soft law. Failing to meet these corporate governance standards can be detrimental to the long-term sustainable success of the organization. This situation may not last long. The demand for better governance practices is driven by investor and consumer expectations. Companies now understand the benefits that can be realized through responsible oversight and decision-making that considers environmental and social factors. 2018 was a watershed year for governance, as shareholder advocacy for sustainability was at its highest. During the year, boards received a record number of shareholder proposals requesting the consideration of environmental and social matters,
The paper closes by discussing the ways in which companies can integrate sustainability into their corporate governance systems. The study will be of particular interest for those who take the courses in Corporate and Business Sustainability, Financial Reporting, Business Ethics or is planning to write a thesis in sustainability reporting and building career in a corporate sector (SCR officer, sustainability lead, business consulting, etc.)
