Corporate Governance, Ethics and Corporate Social Responsibility

This article discusses Corporate Governance, Ethics and Corporate Social Responsibility and their impact on sustainable development goals. It also covers the principles of Responsible Management Education (PRME) and the functions of Corporate Governance. Additionally, it delves into the concept of Economic, Social and Environmental Sustainability.

Corporate Governance, Ethics and Corporate Social Responsibility 1
CORPORATE GOVERNANCE, ETHICS AND CORPORATE SOCIAL RESPONSIBILITY
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Corporate Governance, Ethics, and Corporate Social Responsibility
Sustainable Development Goals
The sustainable development goals constitutes the 17 global goals which have been set by
the United Nations General Assembly with the aim of transforming the world. The paper
however focuses on the goal of quality education to all.
Quality Education
The primary aim of this goals is to ensure that there is an inclusive and equitable
education to all so as to encourage life learning opportunities. There has therefore been an
increase in the literacy levels among both the girls and boys all over the wolrd.The quality
education for all goals believes that it is one of the significant and powerful mechanisms which
could be used for sustainable development. All the girls and boys therefore will complete the free
primary and secondary education by 2020.The other objective of this goal is to ensure that there
will be an equal access to vocational training by all and thus reduce the wealth and gender wealth
disparities to attain a global access to quality higher education in future.
Responsible Management Education (PRME) Core Principles to Support the Goal
The principles include, method such that the processes, frameworks and educational
frameworks are created for purposes of effective learning. The other principle is the purpose
where the capabilities of the students will be developed to enable them to generate sustainable
values in future. Another principle is on the research where a research will be conducted to
enhance an understanding of the rules and effects of organizations on sustainable development
goal (Harjoto, Laksmana and Lee, 2015 p.655). Additionally, there is the principle of values
where the values of global social responsibility will be displayed in the academic activities.
Apart from the above mentioned principles, other principles include, dialogue where dialogue

Corporate Governance, Ethics and Corporate Social Responsibility 3
will be facilitated and supported among various stakeholders such as the students, business, civil
society, educators and consumers on certain matters relating to social responsibility. Lastly, there
is the principle of partnership and this will entail the interaction of the managers with other
stakeholders to widen their knowledge on various ways of meeting the environmental and social
responsibilities.
The organizations can achieve the quality education sustainable development goals by
setting up programs aimed at promoting education for example sponsoring of certain students’
education from the primary level up to the university level. Additionally, the corporations can
support quality education by selecting some of the best students and sponsoring their education
in all levels. The other way through which a company can attain the goal is through making
available quality foods to the children to enable them have the energy to go to schools to attain
education. Also, they can dialogue with various stakeholders such as the students and educators
on ways of attaining quality education among the students by 2030.
.
Corporate Governance
According to Hong, Li and Minor (2016 p.205), the corporate governance can be defined
as the techniques used by the financier of various companies to provide assurance to themselves
that their investment will receive a better rate of returns. It can also be referred to a method of
providing protection to the outside investors against exploitation by the various companies and
this is especially the management and shareholders of a particular company. The different
companies can also use the corporate governance technique as a guideline which could be used

Corporate Governance, Ethics and Corporate Social Responsibility 4
to reduce the agency cost and thus align the various capital of the board and the interest of the
members of the board.
There are various functions which the corporate governance plays in various companies.
For example, the corporate governance is used in the provision of accurate information to the
specific shareholders and this is done with the aim of determining the continuity of the contracts
of the shareholders with the management. Usually, the investment of the shareholders who risk
their money to invest in a particular company can be protected by the use of the corporate
governance (Jizi, Salama, Dixon and Stratling, 2014 p.610). The corporate governance does not
look into the relationships existing between the stakeholders, management of a company and its
board, it also looks into broader relationships existing among the various stakeholders and this
typically contributes to the value chain of any particular company.
Further, the corporate governance can be considered as an exercise of power and this is a
responsibility of the corporate enterprises. Therefore the corporate governance is placed as an
aspect of ethics and this is reflected through the adherence of the rules and law (Mason and
Simmons, 2014 p.80). Based on the stakeholder aspect, the corporate governance can be
categorized into two that is the corporate governance techniques which are external and internal
to the particular companies and therefore there are typically two models of the corporate
governance.
According to Ni and Van Wart (2015 p.180), the first model is the stakeholder model
which entails both the internal and external control which is exerted by stakeholders and
shareholders respectively. The other model is based on the agency theory and in such a model,
the shareholders are the principals and therefore can delegate certain roles to the managers of the
company. The managers act as agents of the firm. Also in the model, there is the aspect of

Corporate Governance, Ethics and Corporate Social Responsibility 5
sharing of risks between the conflict of interest and the business enterprises. However, the
agency theory has a certain limitation such that it cannot explain the approaches the managers
use to tackle certain issues relating to the interest of the shareholders such as the expectations of
the society form the particular organization and the political pressures.
There are also certain principles which must be followed to ensure that a good corporate
governance is attained by a particular company and this is as indicated below;
 Display of fair remuneration.
 An observation of good ethics and this also includes the consideration of the
corporate social responsibility.
 Compliance with the relevant codes of ethics
 Acting in the best interest of the shareholders
 Management and review of various risks in the organization
 Taking into account all the interests of the stakeholders
Corporate Governance Issues, Functions and Structures
The corporate governance structure is made up of two governance systems and this
include, the unitary board which comprises of the non-executive and the executive directors. The
other corporate governance structure is the two tier which entails two various board that is the
management board who have executive responsibilities while the other one is the supervisory
board charged with the supervision and review of the management of a particular company.
Board Responsibilities

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Based on the principles of the corporate governance, the key functions of the board
include, acting in good faith and with due diligence while carrying out their functions, applying
the highest ethical standards by looking into the interests of the shareholders, exercise of an
objective and independent decisions on corporate issues and they should also have an access to
the relevant and accurate information to fulfill some of their responsibilities.
Board Committee
The board committee is an important aspect of an organization and they may be charged
with various responsibilities such as oversight role of the remuneration of the executive, audit
issues and the assessment of the performance of the management.
Functions of the Corporate Governance
There are a variety of functions of the corporate governance and such may include, the
following;
Corporate Accountability
The corporate governance aims at ensuring that the board of directors are made
accountable for all the actions they conduct in the organization and this is typically in the
management functions.
Risk Management and Goals
The board of directors of a particular organization often sets the policies and procedures
used to help in meeting of the key goals and objectives of that particular organization which
could be either short or long term. Since every particular opportunity comes with a variety of
risk, the board of directors are responsible for the management such risks to enable the company
to plan on the attainment of the specific goals.

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Meetings of the Shareholders
The board of the directors of an organization often schedules various meetings to avail
different information relating to the organization such as the financial health to the relevant
shareholders. It is expected that all the shareholder of the company be well informed with the
various practices of the company in order to continue to trust the board in future with their
investment
The Role of Stakeholders and Corporate Managers’ Moral Obligations In Business
Decision Making.
The corporate managers and the stakeholders have a moral obligations when making
business decisions and this is done to abide by the ethical requirements, norms and values which
are acceptable by the a particular society. The key roles of the managers which are considered to
be ethical entails a combination of being either a moral manager or a moral person. To make
ethical business decisions, the managers must have certain traits such as trustworthiness, honesty
and integrity (Filatotchev and Stahl, 2015 p.125). The above traits enables the manager to
comply with the various ethical codes of conduct when making business decisions in a particular
company and this is done to ensure that they can be trusted with the particular shareholders of
the company.
Also, while making the moral business decisions, the managers should exercise certain
behaviors such as having a concern for other, carrying out the right thing and being open to
either the stakeholders or the shareholders of the particular company(Tricker and Tricker, 2015
p.50).. As a manager of a company, when making the ethical business decisions, the managers
should take into considerations the guidelines relating to ethical decision making and this is to
ensure that their decisions do not affect the stakeholders negatively by treating all the

Corporate Governance, Ethics and Corporate Social Responsibility 8
stakeholders equally of the organization. The managers should also implement the written code
of ethics while making business decisions and this will help them to even question some of the
decisions they make to consider if they are right or wrong.
The stakeholders of a company are typically the individuals and groups who have
particular interests in the activities of the company. There are various categories of shareholders
of a company and this is usually based on the level of interest and impact on the particular
organization (Filatotchev and Nakajima, 2014 p.300). A way of classifying the stakeholders
could be either internal or external stakeholders. The internal stakeholders include the trade
unions, management, and employees. However, the external stakeholders comprise the suppliers,
customers, and competitors.
All the stakeholders have a moral obligation when making business decisions in various
companies. For example, the stakeholders should take into account the different ethical codes of
conduct when making decision. Further, the stakeholders practice a moral obligation when
making business decisions by considering the written code of ethics in their decisions and this is
done to ensure that such as organization remains competively above its other key competitors in
the particular industry (Schwartz, 2017 p.50). The other moral obligations of the stakeholders
when making business decisions relates to complying with the norms, values and beliefs of the
particular organization to ensure that it acts in good faith with the laid down practices and
procedures of the company at hand.
Economic, Social and Environmental Sustainability

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Economic Sustainability
The economic sustainability can be defined as a production system which ensures that the
present consumption level is satisfied and this is done without compromising the future
consumption needs. The key aim of the economic sustainability is often the sustainability itself
that is which satisfies the current consumption needs (Rodriguez-Fernandez, 2016 p.145). In the
past, the various economist believed that there were limited natural resources and hence there
was a shift in focus of the proper allocation of the resources in the market in an efficient manner.
However that has changed since the natural resources have become infinite now.
The natural resource base has been strained by the economic activities in various parts of
the world. The economic sustainability in business practice involves the management of the
business in regards to the financial, opportunities, obligations and various environmental risks.
Such a management often have an impact on the people, profits and planet earth. The embracing
of economic sustainability by different business enterprises has enabled them to achieve certain
key goals (Shamir, 2017 p.170). For example, most of the organizations have been have a better
corporate culture, long term profitability and products which are more reliable.
Social Sustainability
The social sustainability has been defined as a social organization system whose main
aim is to eliminate poverty in the society. It also entails the identification and management of the
various impacts of business that is both negative and positive on the individuals. It is vital for
companies to look into the quality of engagements and relationships with its stakeholders since
their actions directly affects the operations of a company (Strand, Freeman and Hockerts, 2015

Corporate Governance, Ethics and Corporate Social Responsibility 10
p.10). The social sustainability efforts of the business generally affects their licenses to carry out
their activities properly.
According to Rupp, Wright, Aryee and Luo (2015 p.20), the business operations can also
be affected by certain factors such as poverty, weak rule and absence of social development
among others. It is therefore vital for a company to embrace social sustainability. The business
enterprise must embrace social sustainability because, one all the consumers need socially
sustainable products since they care a lot about their social and environmental aspect of the
products they purchase. The other thing is that a more secure supply chain will be obtained by
most of the organizations who adopt the social sustainability aspect in their operations.
Environmental Sustainability
The environmental sustainability entails the making of decisions which are responsible
and aims at reducing the negative effects of the particular business son the environment. It is
therefore prudent for the organizations to evaluate the impact of their activities on the
environment (Yakovleva, 2017 p.100). There are various benefits obtained by the organizations
which are environmentally sustainable and such include, making better returns on their
investments. Also, such businesses will have certain marketing advantages such as using the
environmentally sustainable products and services. The other benefit associated with being
environmentally sustainable is a reduction in the costs used by such a company such that it will
be spending less on the energy bills (Tai and Chuang, 2014 p.117). Lastly, more customers will
be attracted to the organization and this has been indicated by a recent research in which most of
the customers have preference for environmentally sustainable companies to those which do not
practice environmental sustainability.

Corporate Governance, Ethics and Corporate Social Responsibility 11
Ethical Corporate Governance Theory and Demonstrate Ethical Conduct
Ethics
The concept of ethics is considered one of the most significant elements of features of
human beings. Additionally, it is often subjective of the point of beginning of the process of
human behavior which is an essential aspect of a business. The business ethics mainly relates to
the relationship existing between the various techniques to human ends and the business
objectives (Belal, 2016 p.10). Further, the business ethics constitutes certain special
responsibilities which are always accepted by individuals as part of the business world. The
business ethics also known as the corporate ethics can be defined as the professional ethics
which aims at assessing the ethical morals and principles in the business environment. Some of
the ethical, norms, values and the unethical practices are the key elements which act as a
guidance to the business practices.
According to Carroll (2015 p.90), there are two typical corporate ethics and such include
the ethics of justice and that of care. The ethics of justice usually look into the exact deeds which
are aimed at the respect of the rights if different individuals. It also focuses on certain aspects
such as those relating to justice, rights and rationality. The ethics of care, on the other hand,
seems to focus on the rights of the individuals in preference to the relational prerequisites.
Further, it is used as a way of sustaining the emphasis of the individual’s process instead of the
policies of an organization (Crane and Matten, 2016 p.200).
Ethics and Corporate Governance
According to Amran, Lee and Devi (2014 p.230), the term ethics takes into account what
is wrong and right. Generally, the right and wrong in the community change over time and it also
varies with the different cultures. The rights and wrongs as based on various societies usually

Corporate Governance, Ethics and Corporate Social Responsibility 12
give rise to the different practices which are desirable. The business enterprises are often
expected to pursue their activities based on the ethical values (ArAs, 2016 p.100). Some of the
activities of the corporations are usually controlled by certain legal rules and requirements such
as the safety and health legislation. The concept of ethics, therefore, rises from that and its key
goal is to use some of the ethical values to the activities of the business enterprises. The major
concern of corporate governance is on the ways of operations of a business and therefore its
major concern is usually on the need for the good corporate ethics which values the activities that
are right in a particular community based on its performances.

Corporate Governance, Ethics and Corporate Social Responsibility 13
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