Skip to content

14 August, 2022

Subscribe Advertise About Us
  • My Account
  • Register
  • Log In
  • Log Out

Board Agenda

  • Governance
  • Strategy
  • Risk
  • Ethics
  • News
    • Categoriess

      • View All
      • Board Moves
    • News round-up: this week in governance

      PwC fined for BT audit; greenwashing sanctions; cost of living crisis; $300m pay deal; US...

    • Twitter Elon Musk Twitter drops due diligence bombshell

      The high-profile lawsuit brought by Twitter against Elon Musk raises an issue close to all...

    • short selling investors How to beat short selling activism

      What would you do if your company was targeted by short-selling activist investors? Communication is...

  • Insight
    • Categories

      • View all
      • Governance
      • Strategy
      • Risk
      • Ethics
      • Board Expertise
      • finance
      • Technology
    • short selling investors

      How to beat short selling activism

      What would you do if your company was targeted by short-selling activist investors? Communication is...

    • ESG debate

      The ESG debate needs to be more nuanced

      The issues boards face are rarely straightforward, and ESG is no exception. It is time...

    • AI

      How to ensure governance of artificial intelligence (AI)

      An ISO standard issued this year gives guidance to boards on the governance implications of...

  • Comment
      • View all
    • global warming

      ESG is not a ‘distraction’

      We must not let ESG become a scapegoat for the systemic failure of our society...

    • Man with magnifying glass The 30-year itch: time to ditch the UK Corporate Governance Code

      Now that governance has come of age, businesses should be able to innovate within the...

    • notebook on boardroom table The UK needs a code of conduct for company directors

      A formal code of conduct for company directors would signal their willingness to apply high...

  • Interviews
      • View All Interviews
      • Podcasts
      • Webinars
    • Board members discussing ESG Stakeholder pressure increases urgency on ESG

      Experts say pressure to act on ESG is coming from regulators, investors and a new...

    • Empty boardroom Many executives ‘fail to understand the role and value of boards’

      A recent webinar on board effectiveness discussed the mix of competence and courage required from...

    • Businessman looking at stormy sky Disaster or disruption? Crisis management requires clear definitions

      Identifying and categorising crises, and developing a methodology to deal with them, can help boards...

  • Careers
      • View all
      • Selection
      • Board Moves
    • News round-up: this week in governance

      PwC fined for BT audit; greenwashing sanctions; cost of living crisis; $300m pay deal; US...

    • US boards diversity US boards slow diversity with poor retirement policies

      Only 6% of organisations have term limits for directors, and there is reluctance around mandatory...

    • News round-up: this week in governance

      Tory leadership contest; Grant Thornton fined; Norwegian insider dealing; virtual AGMs; US environmental disclosures; diversity...

  • Resource Centre
      • White Paper Downloads
      • Book Reviews
      • Corporate & Advisory Services
    • Stakeholder Engagement: A Roadmap for UK Plc Boards

      This guide aims to provide directors and their colleagues with advice on how to ensure...

    • Board Duties in Ensuring Company Engagement with Affected Stakeholders

      This guidance note gives a brief overview of the role of corporate boards of directors...

    • C-Suite Barometer 2021

      At the end of 2021, Mazars surveyed over 1,000 executives around the world for its...

  • Events
  • Search by topic
    • Governance
    • Strategy
    • Risk
    • Ethics
    • Regulation
    • ESG
    • Investor Relations
    • Selection
    • Board Expertise
    • finance
    • Technology
  • Magazine
      • View All
      • Sustainability Works
      • Tomorrow's Leaders
      • Renumeration Tightrope
      • Governance Ascendance
      • Sense In Sustainability
      • Invisible Enemies

Good governance boosts companies’ CSR performance

by Gavin Hinks on July 5, 2021

Study concludes that “corporate board reforms… appear to have a positive spillover for non-financial stakeholders”.

Board members looking at corporate reports

Image: Freedomz/Shutterstock.com

There is much talk about companies improving their treatment of the environment and people—what is often called corporate social responsibility (CSR). And there has been much debate about how this can been achieved. But new research suggests that good old-fashioned quality corporate governance can help work wonders.

Based on a dataset of more than 20,000 observations of 3,514 companies in 34 countries, a team of academics based in Canada and Hong Kong suggests that governance reforms that address classic governance issues such as audit committees and auditor independence, as well as separating the roles of chairs and chief executives, can boost the CSR performance of a company.

The researchers conclude that “corporate board reforms implemented primarily to ensure finances returns to shareholders (e.g. by improving board oversight/monitoring) also appear to have a positive spillover for non-financial stakeholders”.

The conclusions will come as good news to campaigners pushing companies to improve their relationship with stakeholders beyond just shareholders. It might also reassure investors keen to pressure companies to do their part to meet global climate crisis targets.

Links between CSR and governance

The research has origins in concerns surrounding CSR developments. The investigators behind this new research point out that there have been worries that improving CSR might come at a cost to executives who would therefore be less inclined to invest. Past research has also produced “equivocal” links between governance and CSR, they say.

But their statistical analysis finds firm results. Most notably reforms boost CSR more in countries with”more stringent legal environments” and with a more “pronounced” effect on companies with “high levels” of institutional share ownership.

And that may be because of an assumption that pursuing CSR issues at a company boosts shareholder value. The researchers spotted this question, acknowledging that a link between good standards of governance and CSR performance doesn’t necessarily indicate shareholders get better value.

So the team looked at the stats and conclude companies in countries with strong governance reforms “tend to exhibit a stronger relationship between CSR investment and future finance performance”.

They add: “This finding is consistent with the view that increased CSR investment after reforms is likely perceived by shareholders as value-enhancing.”

Increased reporting

There is much activity under way to persuade companies to take CSR more seriously. On the environment alone many companies now face implementation of TCFD reporting, the prospect of the International Financial Reporting Standards Foundation creating its sustainability reporting model, net zero emissions targets from central governments and, after the experience of Shell, an increased chance of climate litigation.

Elsewhere there is ample evidence that the pandemic has placed a focus on the way companies treat their people. The OECD recently insisted part of the response to Covid-19 must be improved governance, especially in relation to environmental, social and governance risks.

But this new research offers hope. At the very least it says good governance will help with CSR. That’s good news for proponents of quality governance everywhere.

  • Facebook
  • Twitter
  • Google+
  • LinkedIn
  • Mail

Related Posts

  • Good governance should start with boards' own performance
    July 4, 2017
    corporate governance sign

    The concept of good governance should be taken a step further, to one of good board self-governance—especially if companies are to navigate difficult, disruptive times.

  • QCA updates smaller quoted companies' governance code
    May 3, 2018
    Quoted Companies Alliance

    With AIM companies having to apply a corporate governance code from September, the Quoted Companies Alliance has updated its own version.

  • MPs say extend governance code to private companies
    February 14, 2017
    House of Commons, Houses of Parliament

    Large private companies should be subject to the same governance rules as publicly listed companies, concludes committee of MPs.

  • Corporate governance principles for private companies published
    June 13, 2018
    James Wates

    New corporate governance principles for private companies is revealed as new reporting requirements are laid before Parliament.

For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda

corporate governance, corporate social responsibility, CSR, governance reforms, research

Search


Sign up to our Newsletter

Receive independent news, thoughtful journalism & expert insights about leadership, corporate governance & key boardroom issues straight to your inbox every week.

SIGN UP

Follow Us


 

 

 

 

 

Most Popular

  • Twitter drops due diligence bombshell
  • Ben & Jerry’s governance tested in court
  • ESG is not a ‘distraction’
  • Virtual AGMs fall out of favour
  • The ESG debate needs to be more nuanced

 


 

Featured Partner Profile

Diligent

Diligent

Diligent Corporation, which was founded in 2001, is headquartered in New York, NY with a European HQ in London. Diligent’s modern governance platform empowers leaders and teams at every level of the organisation to digitally transform and create ...

Featured Partner Resources

Board Transformation 2021: Leadership in Transition

There can be little doubt that the global Covid-19...

Digital Boards: How Technology Adoption is Driving Culture Change and Resiliency

Digital tools proved their worth to boards during ...
EQ 2021 AGM Season report

2021 AGM Season: Successful AGMs in the Pandemic and Beyond

With the impacts of Covid-19 hitting just as the s...
Leadership in AI report

Leadership in AI 2021

This report from Board Agenda and Mazars, in assoc...
Creativity in a Crisis: a Boardroom Map for Innovation

Creativity in a Crisis: a Boardroom Map for Innovation

In the uncertain times at the height of any crisis...
Board Directors Guide to D&O Liability Insurance - November 2020 - AIG & Board Agenda

Board Directors' Guide to D&O Liability Insurance

Directors face liability over a range of new threa...
Leadership-in-Risk-Management-Board-Report

Leadership in Risk Management: Board Report

Board Agenda, in association with Mazars and INSEA...
Director's Guide to Internal Investigations

A Director's Guide to Conducting Internal Investigations

An internal investigation must be handled meticulo...

Global Business Complexity Index 2021

The Global Business Complexity Index 2021 provides...

 


 

ADVERTISE – FREE CORPORATE LISTING

FREE - Add your company profile to our Corporate & Advisory Directory.
ADD

ADVERTISE – PROMOTE YOUR REPORTS & WHITEPAPERS

FREE - Add your company profile to our Corporate & Advisory Directory.
Add Resource

Register Free

Register to receive free article views, selected resource downloads, and all the latest news alerts straight to your inbox. Register


  • Editors & Contributors
  • Corporate & Advisory Services
  • Media Marketing Solutions
  • Contact Us
  • Careers
  • Board Director Network
  • Terms & Conditions
  • Privacy Policy
  • Cookies
  • Sitemap
|