The Importance Of A Good Corporate Governance Framework

1680 Words7 Pages
This paper will discuss why a good corporate governance framework must incorporate stakeholder accountability. For the purpose of this paper, the term stakeholder governance will be used to incorporate all aspects of stakeholder accountability and engagement, that is; dialogue, decision making, transparent operations and implementation of solutions to common problems or goals.
The first part of this paper will describe how the landscape has changed for business operations due to environmental, economic and social reasons. It will set out the evolution of corporate governance as a result of historical events and academic debate and suggest that, ultimately, the top-down, narrow paradigm of mainstream business, namely profit
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Business, no Longer an Island
Corporate governance is no longer viewed in isolation, as a matter for companies and their institutional shareholders. Business scandals, global economic and social crises, climate change and environmental disasters have impacted billions of people, hold high risk consequences and extensive strategic and geopolitical implications for society at large. Issues traditionally seen as outside of the business remit are becoming recognised as critical factors to long-term business success. Organisations are now being called to account for their impact on the environment and non-shareholding stakeholders. Just as a company board should ensure that financial statements are properly audited, it is also responsible for ensuring that management is aware of, and properly manages, less tangible, nonfinancial risks. In this regard, well managed and considered stakeholder governance programmes should open up dialogue which encourages questions and thereby provide access to a broader view of potential risks. Today, revenues of the world’s largest multinationals exceed the gross domestic products of a host of countries, multinationals have a global reach not enjoyed by countries and private companies are increasingly being called upon to deliver services that were once the domain of governments. The power relationship between country states and multinational companies has shifted dramatically over the past 40 years and with that, the
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