Corporate Governance: Role of Board of Directors and CSR in Business

This report delves into the critical role of the board of directors in corporate governance, emphasizing their responsibilities in making business decisions and ensuring ethical practices. It highlights the importance of establishing a robust corporate social responsibility (CSR) structure to enhance accountability and transparency. The report discusses the negative implications of unethical practices, using examples like Enron, WorldCom, Satyam, and the Volkswagen Emission scandal to illustrate the impact on stakeholders such as customers, shareholders, government, and the environment. The primary focus is on the board's duty to act ethically and maintain a balance between stakeholder interests. References to academic sources such as Van den Berghe (2012), Bhasin (2013), and Frias-Aceituno et al. (2013) are included to support the arguments presented.

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Corporate Governance

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A company is referred to an artificial person that has a separate entity in the eyes of
the law; this entity provides rights and liabilities to a company based on which it can sue third
parties or get sued by them as well. However, it did not have the capability to take business
decisions on its own; therefore, the board of directors of the company is responsible for
making business decisions on behalf of the company. The board of directors has many roles
and responsibilities towards the company such as establishing mission, vision, and values,
setting strategy and structure, delegating to management, exercising accountability to
shareholders, ensuring proper maintenance of books of accounts, and others (Van den
Berghe, 2012). However, the most significant role of the board of directors is to maintain a
balance between the interests of stakeholders to ensure that the company conducts its
operations in an ethical manner.
The board should develop and implement an effective corporate social responsibility
(CSR) structure in the company to increase their accountability towards stakeholders and
maintain transparency in operations (Frias-Aceituno, Rodriguez‐Ariza & Garcia‐Sanchez,
2013). The reason why this is the most significant role is because cases involving unethical
practices of companies have increased substantially in the past which highlights the
importance of compliance with corporate governance principles. Enron, WorldCom, Satyam,
and Volkswagen Emission scandal shows the negative implications faced by stakeholders of
a company due to the failure of the board to act in an ethical manner (Bhasin, 2013). The
negative implications are suffered by customers, shareholders, government, local
communities, and the environment. Therefore, the most significant role of the board is to
adopt effective CSR structure to discharge their duties ethically.

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References
Bhasin, M. L. (2013). Corporate accounting scandal at Satyam: A case study of India’s
enron. European Journal of Business and Social Sciences, 1(12), 25-47.
Frias‐Aceituno, J. V., Rodriguez‐Ariza, L., & Garcia‐Sanchez, I. M. (2013). The role of the
board in the dissemination of integrated corporate social reporting. Corporate Social
Responsibility and Environmental Management, 20(4), 219-233.
Van den Berghe, L. (2012). International standardisation of good corporate governance: best
practices for the board of directors. Springer Science & Business Media.