Question 1(a) · 10 marks · 188 words written
Opening · a definition
Effective Corporate Governance refers to rules, laws, principles followed by a corporate organization to ensure effective organization working by being responsible to different stakeholders.
Environment, Social and Governance (ESG) framework boosts environmentally and socially friendly policies of an organization.
Body · points
Effective Corporate Governance refers to rules, laws, principles followed by a corporate organization to ensure effective organization working by being responsible to different stakeholders.
Environment, Social and Governance (ESG) framework boosts environmentally and socially friendly policies of an organization.
Importance of integrating ESG with effective corporate governance
(1) Promotes environment consideration in all business activities Eg. Limiting water pollution (2) Sets an example for others to follow and benefit society (3) Promotes stakeholder engagement leading to higher market share (4) Instills spirit of service in the employees and they contribute more in ensuring environmentally friendly policies (5) work culture of the organizations become more humane, empathatic and aligned to constitutional values of welfare
Benefits of such integration
- Leads to higher profit due to higher customer engagement Eg: Companies prefer customers who are loyal due to its CSR focus eg namaste
- Attract and retains best employees
- Leads to compassionate capitalism (Narayan Murthy)
- Promotion of redistributive justice of CSR (2% of net profits) helps in enhancing awareness Eg: ITC echaupal CSR initiative
Companies should adopt 3P approach for long term growth and financial viability
Close · a way forward
Eg: ITC echaupal CSR initiative Companies should adopt 3P approach for long term growth and financial viability