ETHICS AND THE BOTTOMLINE

The shift in emphasis on best-practice corporate governance is real, and it is here to stay. It comes from people finding and raising their voices, from politicians recognizing the importance of corporate governance for sustainable economic growth, and from influential investors putting genuine pressure on companies to change their behavior. Companies and boards ignore this trend at their peril.
Lucy Marcus, Project Syndicate, 19 August 2015
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ith an ever-increasing awareness of company policies, politics and sources of input, people are beginning to demand more responsibility from the business sector. Now, in an era of social media where people can be heard by thousands and even millions more people than they previously could have, people hold power over these companies. One bad leak can put a corporation into the spotlight. At that point, the only way for them to combat the negative press is to become a better corporation – for example, one that gets media attention for helping the environment, not for corrupt tax evasion schemes. Around the world, the corporate governance landscape is changing in an effort to gain support for responsible practices and policies. This is also largely due to the shifting role that the government feels it needs to play to achieve a robust economy with a strong business core.  Japan’s government has taken a significant lead in the role to regulate businesses for corporate responsibility standards. In 2014, the Japanese Financial Services Agency enacted the Stewardship Code which created a more equal environment for shareholders by ensuring greater transparency and disclosure. The United States Securities Exchange and Commission followed suit this past August by passing a rule that requires public companies to disclose the pay gap between workers and CEOs. One last reason there has been this push for better corporate governance is that sovereign wealth funds, pension funds and global investment banks are increasingly putting their money globally. They expect non-domestic companies to play by rational rules in order to receive their investment. Public opinion, the government, and investor’s money has forced –and enforced– the turn towards better business practices.

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ETHICS AND THE BOTTOMLINE

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