Corporate governance is really about ensuring that companies’ operational processes and policies are robust and responsible. Good governance ensures that a company has clear direction, plans, structure and resources, all of which are necessary for financial success. The onus is on the companies to adopt an accountable, transparent approach, demonstrating principles of integrity in their business practice.
At a time when environmental, social and governance (ESG) issues are a major concern, many of our clients are telling us that they believe companies should take more responsibility for the way in which goods are produced, services are provided and resources are used.
Why does it matter?
Ultimately, a well run company is more likely to deliver strong long-term investment performance.
It’s in the interests of every stakeholder to encourage companies to work within best practice guidelines. Many individuals, after all, have invested some form of capital in the companies’ success, whether in the form of labour provided by employees, the loyalty shown by customers or the money invested by shareholders.
Another point worth bearing in mind is that corporate governance allows businesses to stand out from their competitors. Companies that demonstrate a commitment to improving their corporate culture and acknowledge their responsibilities within the local community are more likely to enjoy a superior reputation.
