Buga MM-TM1 Activity 4: 1. What is the relationship between CSR and CG in the management of resources? 2. How are they interdependent to each other?
CG was defined as “a set of relationships between a company’s management, its board,
its shareholders and other stakeholders, …” by The Organization for Economic Cooperation and Development (OECD) in 2004. This includes the internal and external factors that affects the interest of the company. The internal and external factors of the company are the laws, rules, the processes that the company establish to be guided on how they should operate. With CG, a company should manage the environmental impact of the business, it should ensure that all actions of the company live in attaining its responsibility to the society and to the environment. Through CSR, it extends the responsibility of a management in controlling its resources, specially in its sustainable development. In managing a company’s resources, CSR and CG should works hand in hand in achieving its goal in balancing the impact of its operations. CSR and CG are interdependent to each other. In making corporate rules, the corporate responsibility for the society and the environment should be the topmost priority. CG should facilitate the effectiveness of the company in terms of economic, social, and environmental. Effective CG has effective CSR. Effective CG helps a corporation channels its resources wisely, which helps to protect scarce resources in meeting the needs of the society, this helps capital cost as investors are confident of their investment. (Mousavi, 2013) Thus, Corporate Governance must be considered sincerely because having a very good CSR activities with bad processes, laws and rules governing it, will only lead to wasting company’s resources.