Corporate Governance & Social Responsibility Essay - 1

Corporate Governance & Social Responsibility - Essay Example For any company wishing to be listed on a stock exchange, it is important that it define its corporate governance policy. Corporate governance is described as a system where companies are managed and directed. Clark (2004) asserts that, corporate governance influences how particular company objectives are achieved and set, how risk is assessed and monitored as well as how performance is optimized. It is quite observable that good structures of corporate governance encourages employees and general companies to create value , control system in relation to risks involved and provide accountability. There is need for this International Extractive Company to adapt specific corporate governance principles in dealing with actability, disclosure to shareholders, fiduciary duty, and mechanism of control and auditing (Clark 2004). It is very important for this International Extractive Company to understand the right of shareholders and key ownership functions. It is essential for international extractive Company to adapt corporate governance that protect and facilitate shareholders rights. OECD (2004) asserts that, shareholders rights need to include; safe and secure methods of ownership registration, transfer or conveying of shares, timely receive relevant information about the company, allowed to participate in voting during shareholder meeting and finally, be free to either elect or remove member of the board. By so doing, it is evident that shareholders will be able to follow company’s performance in an efficient and transparent manner. The other principle that needs to be adapted is building on corporate governance which recognizes the rights of the stakeholders which should be established through mutual agreements and law as well as encouraging active co-operation between stakeholders and the corporation in creation of jobs, wealth and sustainability of the company financially stable enterprises(OECD 2004). By so doing, it is quite evident that stakeholder’s interest is protected. Further, adaptation of this principle ensures that performance-enhancing mechanisms are adopted through the creation of a proper and efficient employee engagement. If these two principles namely; role of shareholders in corporate governance and rights of shareholders and key ownership function are adopted by this company, the company will be able to perform well within the stock exchange and it will enhance efficiency in its corporate governance(Clark 2004). Question 2: Recommended Corporate Social Responsibility Initiatives that the Board the Board Should Adopt In addition to adapting the above mentioned corporate governance principles, it is important for International Extractive Industry to engage in various corporate social responsibility initiatives. According to Lee (2008), corporate social responsibility is a type of corporate self-regulation normally integrated into a business model. Engaging in corporate social responsibilities will enable this company to have a commitment towards the contribution of sustainable development through working with employees, their families and the general community (Strike et al 2006). It is important for the company to accept various duties presented to it such as sponsoring national and international sporting team. Here, social responsibility will widely be manifested in its legal, corporate, and economic systematic action in recognition on a particular communal responsibility and its attempt to meet the designed social need. There are various key drivers for CSR namely; social investment, transparency and trust, enlighten self-interest and increased public expectations. Enlighten self-interests is important in creating a synergy of ethics which ensures that a cohesive society