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It is not from the benevolence of the butcher,the brewer,or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self love, and never talk to them of our necessities but their advantages Adam Smith
responsibility of business is to increase profits so long as it stays within the rules of the game, which is to say, engages in open
Economic
Environment sphere Eco-friendly products Recycling waste Climate protection Emissions control
Social
Environment
How to move the three spheres closer? How to align Social and Environmental spheres with the
Economic sphere?
Recent Emergence
Poverty and insecurity worldwide Anti- globalisation calls Mistrust of large corporations Greater media/IT reach Increased stakeholder activism including increasing investor pressure Increasing government interest/action
GLOBAL CORPORATIONS
Economic impact of large corporations
becoming more profound Of the 100 largest economies of the world 51 are Corporations 161 countries of the world have economies smaller than Wall-Mart The sales of 200 firms of the world is equivalent to appx. 28% of worlds GDP
EXECUTIVE MANAGEMENT
Professional Managers have enormous
powers. The powers could be misused. The owners need to have a control. The minority shareholders need to be protected. The conflicting interests of different stakeholders have to be balanced.
The survey gathered response from over 200 institutional investors managing approx. US$2 trillion in assets. 40% of the respondents were based in the U.S., balance in Europe, Asia and Latin America
10
Most investors say that board practices are at least as important as financial performance
Q: In evaluating companies for potential investment, how important are board practices relative to financial issues?
100%
33 48
25
39 44 32 23 Asia 36
20
0%
Less Important
Latin America
Europe/US
11
Most investors would be willing to pay more for the shares of a well-governed company
Q: Would you be willing to pay more for a company with good board governance practices?
100%
83
83
89
89
81
81
Yes
17
17
0%
11
11 Asia
19
19 Europe/US
No
Latin America
12
30%
25%
20%
13
15
ICRAs C G R Scale
CGR1 Highest level of corporate governance CGR2 High level of corporate governance, but not
high as in CGR1 as
CGR3 Adequate level of corporate governance CGR4 Moderate level of corporate governance
17
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