ACCA (the Association of Chartered Certified Accountants) recently published a report examining the interrelation between businesses and society, and the importance of good corporate governance in facilitating a positive relationship between them.
The report – Tenets of good corporate governance – examines five key issues:
- The relationship between companies and society
- Diversity and balance
- Enabling an effective board
- Executive remuneration
- Gatekeepers of corporate governance
Jo Iwasaki, head of corporate governance at ACCA, said:
“The focus of the corporate governance debate is shifting: from an emphasis on compliance with processes and procedures to the outcomes of applying them.
“We put together the Tenets of good corporate governance to explore some of the key topics and issues in global corporate governance practice and debate: from the campaign to promote diversity and balance at a board level to the call to place executive remuneration in the context of the remuneration gap between the top and the bottom of the company.
“A common theme across the report is the need for companies to think deeply about their business model and how it may look in 5, 10 or 20 years’ time. Companies need to achieve their long-term business purpose, but this must also involve envisaging where the society is going, and how they fit with the vision. Businesses need to realise the importance of a motivated and engaged workforce and positive relationship with their environment.
“While the corporate governance debate has come some way over the last decades, many still see it as a compliance exercise. However, some companies are exceeding existing best practice which, combined with a change in public perception, should raise the standard of practice over time.
“Hopefully this report helps businesses to examine their vision and strategic direction in a broader context, which will in turn allow their companies to achieve long-term growth.”
Professor Judge Mervyn King, internationally recognised expert on corporate governance, said:
“All businesses exist in the triple context of the economy, society and the environment. Good corporate governance is about considering the outcomes that a business model has on its surroundings, and the positive role that it can play in creating the long-term health of the company
“I am glad to see global organisations like ACCA engaging with this important issue, and hope that business leaders and decision-makers consider and embed the tenets of good corporate governance across their organisations.”
Tenets of good corporate governance is the latest report in ACCA’s tenets series, which also includes the tenets of tax, business law and corporate reporting.