Chapter 6

The Corporate Governance Dimension of Sustainability

In the aftermath of the 2007–2009 global financial crisis, countries worldwide have taken initiatives to improve their corporate governance by establishing more robust measures to strengthen their regulatory frameworks in order to promote economic stability, public trust, and investor confidence in their financial reporting. Examples of these corporate governance measures include the Dodd-Frank Act of 2010 and Basel III, which are intended to strengthen board oversight, positioning risk management as an important board responsibility. They also aim to link executive compensation schemes with sustainable long-term performance and encourage shareholders to take a more active role in corporate governance. These measures are designed to enable the convergence of a set of globally accepted corporate governance measures and the integration of business sustainability into corporate governance. These and other measures of corporate governance and their integration into the five EGSEE (economic, governance, social, ethical, and environmental) dimensions of sustainability performance will be presented in this chapter. This chapter also outlines professional accountability for all corporate governance participants including the board of directors, investors, management, internal auditors, external auditors, financial analysts, legal counsel, regulators, and standard-setters.1 Furthermore, this chapter describes ...

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