Corporate Governance, Branding and ESG Strategy
It is the system by which corporations are directed and controlled.
Right and responsibilities among different participant
Board of directors, managers, shareholders, creditor and stakeholder
Detail of Corporate Governance
- Firms of different sectors are our working partners.
- We identify and have shared vision and mission with many businesses.
- CEO selection and succession;
- Providing feedback to management on the organization’s strategy;
- Compensating senior executives; monitoring financial health,
- Performance and risk;
- Ensuring accountability of the organization to its investors and authorities.
- Provide value to the corporation in the form of financial, physical, human and other forms of capital. Many parties may also be concerned with corporate social performance.
- Examples: Anglo-American model, OECD
- Monitoring by the board of directors: Regular board meetings allow potential problems to be identified, discussed and avoided.
- Internal control procedures and internal auditors: Internal auditors are personnel within an organization who test the design and implementation of the entity’s internal control procedures and the reliability of its financial reporting.
- Balance of power: maintain a check and balance mechanism within the corporation
- Performance-based: It may be in the form of cash or non-cash payments such as share options or other benefits. Such incentive schemes, however, are reactive in the sense that they provide no mechanism for preventing mistakes or opportunistic behavior, and can elicit myopic behavior.
- Monitoring by large shareholders: Due to their investment in the company, they have certain right degree of control and power, to monitor the management.
External corporate governance controls encompass the controls external stakeholders exercise over the organization.
- Independent auditors
- They will be responsible for working with internal auditor (accountants)
- demand for and assessment of performance information
- government regulations
- media pressure
Researches were conducted for large scale corporations, it is impossible to apply all those practices on small and medium enterprises. Despite the fact that some of the studies might not be relevant, the followings could be used:
Small enterprises that owned and managed by a single individual entrepreneur
1. Credible accounts and a simple system of internal control which enable the entrepreneur to know the company most updated financial situation, and also enable the lenders to accept them as reliable. Their preparation will frequently require the part time assistance of a professional accountant who is able to advise on record keeping and presentation.
2. A simple, written business plans which deﬁnes the company’s objectives and the chosen route for reaching them. It helps to identify the company’s SWOT. Such plans will assist the entrepreneur to improve business decisions, and a coherent and logical plan will contribute to the company’s credibility in the eyes of lenders.
3. Performance indicators, including a budget and a system for monitoring debtors and creditors, will also be valuable; it will enable the entrepreneur to monitor whether the company is performing in accordance with the plan.
4. A simple analysis of the risks facing the company and basic policies for managing them will assist the entrepreneur to avoid disaster.
5. A well governed enterprise will be aware of the laws with which it must comply and will adopt appropriate compliance policies; this may require external professional advice.
Medium scale enterprises that owned by several shareholders
Apart from the above governance (1)-(5), the following might serve as guideline:
a. Establish a well written Memorandum and Articles of Association (M&A) which reserves some powers for the exercise by shareholders in general meeting.
b. Build up an accountable board of directors that represent the interests of different shareholders.
c. A system for delegating authority from the board to management so that everyone knows who is responsible for doing what.
d. A mechanism for ensuring that the board performs the functions which it has reserved for itself and refrains from hampering management by second guessing it on matters which have been delegated to it.
e. A system for involving the board and management in setting the goals and strategies for the company, and for agreeing the performance indicators which are to be used for measuring progress towards the objectives.
Corporate Social Responsibility
CSR is a concept related to the behavior and conduct of corporations and those who are associated with them. Business enterprises would integrate the principles of social and environmental responsibility in their operations as well as in the way they interact with their stakeholders.
CSR is also a process with the aim to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders.
CSR as Corporate Philanthropy
This includes monetary donations and aid given to local and non-local nonprofit organizations and communities, including donations in areas such as the arts, education, housing, health, social welfare, and the environment, among others, but excluding political contributions and commercial sponsorship of events.
CSR as Business Strategy
For instance: fair trade deal. It mitigates operational impact and risks while supporting external relationship.
CSR for Creating Shared Value
The shared value model is based on the idea that corporate success and social welfare are interdependent. A business needs a healthy, educated workforce, sustainable resources and adept government to compete effectively.