Business Sustainability, Corporate Governance, and Organizational Ethics

CHAPTER 3Introduction to Business Sustainability, Corporate Governance, and Organizational Ethics

1. Introduction

Many initiatives and developments over the past several decades have shaped business sustainability, corporate governance, and organizational ethics (BSCGOE). The early developments underscored the need to ensure that management acts for the sustainable well-being of the company and its shareholders. Developments in the late 1990s and the early 2000s reinvigorated interest in, and focus on, effective corporate governance to protect shareholders and other stakeholders (e.g. employees, creditors, and customers) from managerial misconduct and corporate malfeasance. Corporate governance reforms – including the Sarbanes-Oxley Act of 2002 (SOX) and related SEC implementation rules, the listing standards of national stock exchanges (the New York Stock Exchange, Nasdaq, and the American Stock Exchange), and the best practices and guiding principles of professional organizations (the National Association of Securities Owners and the Conference Board) – came in response to the wave of financial scandals in high-profile public companies. These reforms were intended to influence corporate culture by requiring professional accountability, personal responsibility, and integrity for all participants in corporate governance and financial reporting processes.

Corporate governance has transformed from compliance requirements to a business strategic imperative of creating shareholder ...