CORPORATE GOVERNANCE &

BUSINESS ETHICS
Outline:
 Corporate Governance
 Concept of Corporate Governance
 Principles including 4Ps of Corporate Governance
 Expectations of Stakeholders
 Five (5) Golden Rules of Corporate Governance
 Corporate Social Responsibility
CORPORATE GOVERNANCE

 Corporate governance is the system by which companies are directed

and controlled. Boards of directors are responsible for the governance
of their companies.
OECD Official Definition of  Corporate
Governance in Business
 The purpose of corporate governance is to help build an environment of trust,
transparency and accountability necessary for fostering long-term investment,
financial stability and business integrity, thereby supporting stronger growth and
more inclusive societies.(Curria Angel, 2015)
Corporate Governance
Mechanisms
Internal Governance
Mechanisms
 The foremost sets of controls for a  Board of Directors
corporation come from its internal
mechanisms.
 Managerial Incentive Compensation
 Ownership Concentration
 Internal mechanisms include
oversight of management,
independent internal audits, External Governance
structure of the board of directors
into levels of responsibility,
Mechanism
segregation of control and policy  Market for Corporate Control
development.
 STRUCTU
RE
SHAREHOLDERS

F
WOR RD O
KER
S BOA CTORS
DIRE

EX
E CU
TI O
VE CE
S
STAKEHOLDER THEORY

 The stakeholder theory looks at the relationships between an organization and

entities its internal and external environment in addition, it considers the effects of
these connections on which a business conducts its activities.

Internal Stakeholders  External Stakeholders 

 Are the corporate directors and  May include creditors, auditors,
employees, who are involved in customers, suppliers, government
corporate governance process. agencies, and the community at
large.
PRINCIPLES INCLUDING 4 P’S OF
CORPORATE GOVERANANCE
 The Principles are intended to help policymakers evaluate and improve the legal,
regulatory, and institutional framework for corporate governance, with a view to
support economic efficiency, sustainable growth and financial stability.
PRINCIPLES INCLUDING 4 P’S OF
CORPORATE GOVERANANCE
KEY PRINICIPLE OF CORPORATE GOVERNANCE

 Fairness - Fairness refers to equal treatment, for example shareholders should

receive equal consideration in proportion to their respective shareholdings.

 Transparency – Transparency refers to a company’s openness and willingness to

disclose clear information to shareholders and other stake holders.

 Accountability - Corporate accountability refers to the obligation and responsibility

to explain the company’s action and conduct.  

 Responsibility –The board of directors have the authority to act on the company’s
behalf. Hence, they should assume complete responsibility and exercise the authority
accordingly.
4 P’S OF CORPORATE GOVERANANCE
PEOPLE
 Investors PURPOSE
 Vision PROCESS
 Shareholders
 Mission  Business
 Employees PERFORMANCE
processes
 Society  Objectives  Growth
 Compliances
 Strategy  Efficiency &
 Innovation
 Plans Effectiveness
 Leadership
&
Management
EXPECTATION OF STAKEHOLDERS

In order to understand the expectations of the stakeholders one needs to understand the
connection between vision, mission & Strategy with regard to the stakeholder
expectations.
1. Vision - is the preferred picture where an organization wants to be in future. This is
something in mind and through visualization entity is assuming itself to that position
2. Mission - tells the purpose & reason for the existence of the entity. Through this, we
try to achieve your Vision by writing our mission statement
3. Strategy - is the direction of the organization for the future. As the company have
written down its mission statement therefore we need to design a plan should be in
line with the mission & the stakeholder’s expectations
4. Stakeholders - are the one, who can affect or can be by the entity based upon their
power & interest.
Typical inputs needed for the Stakeholder Expectations
Definition Process include the following:

• Initial Customer Expectations: These are the needs, goals, objectives, desires,
capabilities, and other constraints that are received from the customer for the
product within the product layer.
• Other Stakeholder Expectations: These are the expectations of key stakeholders
other than the customer.
• Customer Flow-down Requirements: These are any requirements that are being
flowed down or allocated from a higher level (i.e., parent requirements). They are
helpful in establishing the expectations of the customer at this layer.
Understand Stakeholder Expectations

• Thoroughly understanding the customer and other key stakeholders’ expectations

for the project/product is important. It provides the foundation upon which all other
systems work depends. It helps ensure that all parties are on the same page and that
the product being provided will satisfy the customer.

• Through interviews/discussions, surveys, marketing groups, e-mails, a Statement

of Work (SOW), an initial set of customer requirements, or some other means,
stakeholders specify what is desired as an end state or as an item to be produced and
put bounds on the achievement of the goals.
EXPECTATION OF STAKEHOLDERS
Stakeholders Expectations
1. Shareholders  A fair and steady rate of returns (dividends) on investment
 Increase in the future earning of the company
 Increase in the market capitalization of investment
2. Employees  Recognition of service by providing fair renumeration as also
incentives
 Stability of employment
 Help improve standard of living
3. Customers  Provide quality goods or services at a fair price and on a fair
terms
 Restraint from restrictive practices or unfair practices
4. Competitors  Restraint from adopting any strategy to elbow competitors
out with unfair or restrictive practices or through violation of
competition law norms
5. Creditors  Ability to pay the principal and interest as per contract
obligations
EXPECTATION OF STAKEHOLDERS
Stakeholders Expectations
6. Government  Behave as a responsible and good corporate citizen
 Non-evasion of taxes and dues to the government
 Involvement in social cause e.g. charities, donations, etc.

7. Community  Growth in employment generation to secure good local

employment
 Protection of environment

8. Public at large  To hold the Board accountable for:

- Limiting senior executives compensation
- Full environmental protection
- Avoidance of fraud within the company
- Caring for employees
 FIVE GOLDEN RULES OF CORPORATE
GOVERNANCE
1. An honest or ethical business culture and morality of organizational behavior.

2. A clear goal, and purpose, taking account of the interests of, and agreed by, all the key
stakeholders.

3. A practical strategic plan to achieve the business’s Goal, recognizing the market
opportunities and pressures, and the strengths and weaknesses of the resources available.

4. An organization that is appropriately structured and adequately resourced. In terms of

people, skills, processes, assets and finance, to deliver the chosen strategy.

5. Trustworthy and reliable reporting systems to provide accountability and transparency to

the stakeholders who have an interest in the business.
CORPORATE SOCIAL RESPONSIBILTY

WHAT IS CORPORATE SOCIAL RESPONSIBILITY (CSR)?

 A management concept whereby  companies integrate social and environmental
concerns in their business  operations and interactions with their stakeholders.
(United Nations Industrial Development Organization (UNIDO))
WHAT IS CORPORATE SOCIAL RESPONSIBILITY (CSR)?

 The idea that a company should play a positive role in the community and consider
the environmental and social impact of business decisions. It is closely linked to
sustainability − creating economic, social, and environmental value – and ESG,
which stands for Environmental, Social, and Governance. All three focus on non-
financial factors that companies, large and small, should consider when making
business decisions. (Business Development Bank of Canada (BDC))
WHAT IS CORPORATE SOCIAL RESPONSIBILITY (CSR)?

 The idea that a business has a responsibility to the society that exists around it
(Sustainable Business Strategy Online Course)

 The obligation of an organization to serve the interests of society in addition to its

own interests. (MANAGEMENT , 12TH EDITION BY JOHN R. CHERMERHORN
JR)
PERSPECTIVES ON CORPORATE
SOCIAL RESPONSIBILITY:
CLASSICAL
VIEW
SOCIOECONOMIC
VIEW
SHARED VALUE
VIEW
PERSPECTIVES ON CORPORATE
SOCIAL RESPONSIBILITY:
business should focus on profits
In this view, the principal obligation of the management
CLASSICAL VIEW
should be to owners and shareholders.
linked to the respected economist and Nobel Laureate,
Milton Friedman.
Proponents of this view believe that society’s interests are
best served in the long run by executives who focus on
maximizing their firm’s profits.
PERSPECTIVES ON CORPORATE
SOCIAL RESPONSIBILITY:
managers must be concerned with the organization’s
SOCIOECONOMIC effect on the broader social welfare and not just with
corporate profits.
VIEW
puts the focus on the triple bottom line of not just
financial performance but also social and environmental
performance.
pursuit by a business will enhance long-run profits,
improve public image, make the organization a more
attractive place to work, and help avoid government
regulation.
PERSPECTIVES ON CORPORATE
SOCIAL RESPONSIBILITY:
advocated by Michael Porter and Mark Kramer as an
SHARED VALUE alternative way of thinking.
VIEW Approaches business decisions with the understanding
that economic and social progress are interconnected.
Virtuous Circle – CSR leads to Idea is to seek business advantage by following
improved financial practices and aligning strategies with social issues like
performance for the firm, aging, illiteracy, nutrition, resource conservation, and
which in turn leads to a more poverty.
socially responsible actions in suggests a virtuous circle
the future.
TYPES OF CORPORATE SOCIAL
RESPONSIBILITY:
ENVIRONMENTAL ETHICAL

PHILANTHROPIC ECONOMIC
 TYPES OF CORPORATE SOCIAL
RESPONSIBILITY:
Examples
 Reducing pollution, greenhouse gas
ENVIRONMENTAL emissions, the use of single-use
plastics, water consumption, and
general waste
 Regulating energy, sustainable
 belief that organizations should
resources, and recycled or partially
behave in as environmentally
recycled materials
friendly a way as possible
 TYPES OF CORPORATE SOCIAL
RESPONSIBILITY:
Examples
 set its own, higher minimum wage if
ETHICAL the one mandated by the government
doesn’t constitute a “livable wage.”
 require that products, ingredients,
materials, or components be sourced
 concerned with ensuring an
according to free trade standards.
organization is operating in a fair
and ethical manner
TYPES OF CORPORATE SOCIAL
RESPONSIBILITY:
refers to a business’s aim to actively
make the world and society a better place
PHILANTHROPIC organizations driven by philanthropic
responsibility often dedicate a portion of
their earnings.
TYPES OF CORPORATE SOCIAL
RESPONSIBILITY:
•practice of a firm backing all of its
financial decisions in its commitment to
ECONOMIC do good in the areas listed above.
•end goal is not to simply maximize
profits, but make sure the business
operations positively impact the
environment, people, and society.
BENEFITS OF CORPORATE SOCIAL
RESPONSIBILITY:
• Powerful marketing tool

• Improve employee engagement and satisfaction

• force business leaders to examine practices related to hiring,

management, sourcing and delivery
EVALUATING CORPORATE SOCIAL
PERFORMANCE:
Range of Performance

COMPLIANCE – acting to avoid adverse consequences

to
CONVICTION – acting to create positive impact.
EVALUATING CORPORATE SOCIAL
PERFORMANCE:
COMPLIANCE behaviors focus on being profitable and obeying the
law; CONVICTION behaviors focus on doing what is right and
contributing to the broader community.
FOUR STRATEGIES OF CORPORATE
SOCIAL RESPONSIBILITY:
FOUR STRATEGIES OF CORPORATE
SOCIAL RESPONSIBILITY:
Obstructionist Strategy
(“Fight social demands”)

Tries to avoid and resist pressures for

social responsibility; focuses mainly
on economic priorities
FOUR STRATEGIES OF CORPORATE
SOCIAL RESPONSIBILITY:
Defensive Strategy
(“Meet legal and market requirements”)

focuses on protecting the

organization by meeting minimum
legal requirements and responding to
competitive market forces
FOUR STRATEGIES OF CORPORATE
SOCIAL RESPONSIBILITY:
Accommodative Strategy
(“Meet ethical requirements”)

accepts social responsibility and tries

to satisfy society’s basic ethical
expectations.
 FOUR STRATEGIES OF CORPORATE
SOCIAL RESPONSIBILITY:
Proactive Strategy
(“Take leadership in social initiatives”)

actively pursues social responsibility

by taking discretionary actions to
make things better in the future
 CORPORATE
SOCIAL
RESPONSIBILITY
PROGRAMS
DBP has strengthened its corporate social responsibility efforts, enabling it to share the benefits of its continued financial success with disadvantaged sectors of Philippine society.
DBP continues to be at the forefront of carrying out relevant and meaningful programs through its flagship initiatives in three major areas: education, environment, and an outreach program.

Education
Through the DBP Resources for Inclusive and Sustainable Education (RISE), the Bank sends indigent but deserving high school graduates to college. Scholarship assistance covers the whole range of the
students’ requirements, including tuition, books, cost of living, and allowances.
The Bank also has existing partnerships with the Department of Education covering equipment and facilities improvement, as well as provision of school supplies and learning materials for students and
learners among others.
Environment
The DBP Forest Program is a non-credit program that aims to stop
denudation and restore the country’s forest cover through organized
collaboration with government and non-government organizations, state
universities and colleges, people’s organizations and other qualified
forest partners.

Outreach
DBP supports community development thru its outreach activities and
programs. The Bank extends assistance to charitable institutions,
organizations, and LGUs for projects aimed to augment the provision of
basic social services to select vulnerable groups of society and for
calamity and disaster response.

CSR Statement
As a catalyst for a progressive and poverty-free Philippines, the
Development Bank of the Philippines is committed to upholding its
corporate citizenship program through initiatives that promote the
welfare of the Filipino people particularly the underprivileged.
 
Reference:

https://www.yourarticlelibrary.com/company/stakeholders/expectations-of-stakeholders-from-a-company/99381

https://www.applied-corporate-governance.com/best-corporate-governance-practice/importance-of-business-ethics/

Management, 12th Edition, John R. Schermerhorn Jr., John Wiley and Sons

https://www.unido.org/our-focus/advancing-economic-competitiveness/competitive-trade-capacities-and-corporate-responsibility/corporate
-social-responsibility-market-integration/what-csr

https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/glossary/corporate-governance

Tim Stobierski, Types of Corporate Social Responsibility To be Aware Of

https://online.hbs.edu/blog/post/types-of-corporate-social-responsibility, October 23, 2022

Harvard Business School Online, https://www.youtube.com/watch?v=ZoKihFLCY0s