Along with analysing E (Environmental) and S (Social) implications, it is equally critical to understand and address G or governance factors as poor corporate governance is frequently at the root of mismanagement. Starting by laying out the various governance factors, which can encompass purpose, strategy, leadership, decision-making, conduct and reputation among others.
Governance has a long been focus area for stakeholders… and as we speak today, we still see the same area that stakeholders focus on. Board diversity, corporate behavior or Ethics, oversight controls on financial matters… decision making process… Risk Management…. Last we wanted to hear is fraud or bribery
15 – 20 years ago… ‘Governance’… is something that doesn’t give much emphasis to ESG investors, some people say G in ESG is a small G as compared to E & S, I belief ‘G’ is an important components in organization perspective…”G’!!! able to shake the organisation”…. We see many progresses made on Governance standard internationally and Malaysia through respective regulators & associations… such as The Malaysian Code of Corporate Governance (MCCG) by SC
The goal of good governance is to make organization accountable to management and public at large or community… We need to draw more stakeholders intention to the important of the GOOD GOVERNANCE, as we all aware that poor corporate governance is the root of mismanagement.
In today’s business climate:
- 1st- Stakeholders are increasingly asking for greater transparency, they are expecting more in terms of how the governance gets done and communicated… A wide range of stakeholders with different concerns need to be addressed & engaged, this includes… the Board, senior management, customers, employees, shareholders, 3rd party suppliers and regulators
- 2nd- The Rising needs for corporations to have a competent professionals and a good governance framework… to accommodate for the 3 main key stakeholders, The shareholders, BODs, and Sr Management that can actually interact with one another effectively, with the objective of achieving companies sustainability in the long term.
- In some situations, we see the CEO fighting against BOD, BOD fight against Shareholder, Shareholder A fight against shareholder B…… It reflects of the human interactions and communication gaps, somehow it also reflects the possibility of long term obj of the company is not clear, or the key stakeholders does not really understand the companies ultimate purpose… That makes the key stakeholders can’t come into some sort of harmonise environment within organization……
- It doesn’t mean BOD to agree with everything put forward by the Top Management. The Organisation need to come out & communicate with clear strategic vision and values that can align Shareholders, BODs, and Top Management… The strategy That able to link back with the Purpose, leadership, a decision-making process, good conduct and positive reputation of the organization…
- It happens where all levels could come together, digest, understand and agree to the shared values and….. it must have an initiative (ie Chair and Board to provide clear direction to mgmt.) to make the situation better…. through various initiative such as proper on boarding session for a new board member, casual dialog through retreat, regular high tea, and many other ways that doesn’t has to be a formal occasion….
- Cause end of the day. “communication is the key, at least at the top level before it will be cascade down to whole organization through various means such as training etc”.
And it can work well if you have the right personality with the right CG framework in place…
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