WHAT IS THE IMPORTANCE OF CORPORATE GOVERNANCE IN GLOBALLY MOBILE COMPANIES? Corporate governance is challenging for directors, especially in terms of understanding their roles, compliance with regulations, and the growing importance of environmental, social and governance (ESG) factors. There has been a change in focus among non-


executive directors, who realise that they are under greater scrutiny than ever before. “As a result of some recent corporate governance


disasters, people are more circumspect about going onto boards and taking on executive responsibilities,” David W Duffy says. “We have seen in the US, and in many other countries including the UK, situations where corporate governance has gone wrong. Compliance and regulation is driving a lot of change in regulated sectors like financial services, healthcare and pharmaceuticals.” In all industry sectors ESG has become a significant


concern for organisations, and this is especially true for companies with employees and business models that cross continents. The Corporate Sustainability Reporting Directive


(CSRD) came into force in the European Union in January 2023 and it strengthens the rules concerning the social and environmental information that companies have to report. Large companies and listed SMEs will now be required to report on sustainability


and the first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025. Global bodies such as the World Economic Forum


have also been at the forefront of ESG, arguing that strong ESG polices create a more healthy and inclusive world in its April 2022 report, ‘Investing in Health Equality’. However, David W Duffy says collecting accurate


ESG data and ensuring its veracity is a major challenge for organisations, and they need to be cautious and avoid greenwashing.


“ By following the best practices of good corporate governance, companies can minimise the risk of fraud and corruption, improve transparency, make better decisions, and reduce the risk of shareholder activism.”


DAVID W DUFFY, CO FOUNDER & CEO OF THE CORPORATE GOVERNANCE INSTITUTE


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THINK GLOBAL PEOPLE ES G


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