Corporate governance should focus on transparency and sound company practices. Here are principles that can guide that work.
Corporate governance and its direction
An organization's long-term value depends partly on the quality of its corporate governance and the effectiveness of its decision-making procedures.
Strong governance does not guarantee higher profits, but ethical principles can provide a solid basis for responsible decisions and sustainable development.
Principles and values in senior leadership
Some directors add isolated ethical practices to their agendas. Deeper change requires principles that guide personal and collective conduct throughout the organization.
Governance matters internationally because it can support organizational performance and the well-being of the communities around a company.
Corporate governance is the system for directing and overseeing an organization. It involves the joint work of the board of directors and executive management, each acting within agreed policies and ethical standards.
Twelve corporate governance principles
The original article draws on OECD/G20 guidance and a 2018 review by Mexico's Consejo Coordinador Empresarial. These points are presented as general recommendations, not as universal legal requirements.
EthicsGlobal groups them under trust, honesty, and compliance:
Trust
1. Treat stakeholders fairly and respect and protect their interests.
2. Create economic and social value while considering stakeholders, organizational stability, and continuity.
Honesty
3. Manage and disclose information responsibly.
4. Direct the organization honestly and responsibly.
5. Adopt an organizational Code of Ethics.
6. Prevent unlawful transactions and conflicts of interest.
7. Provide ways to report wrongdoing and protect those who speak up.
Compliance
8. Define a strategic direction and oversee management performance.
9. Fulfill the board of directors' fiduciary responsibilities.
10. Identify, manage, control, and disclose strategic risks.
11. Meet applicable legal requirements.
12. Give shareholders, investors, and stakeholders confidence that the business is run honestly and responsibly.
The 2018 Mexican guidance cited in the source distinguishes the board's role in setting strategy and oversight from executive management's role in running the business and implementing the plan.
At EthicsGlobal, we want organizations to build strong governance and an ethical culture across their administrative functions.
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