CORPORATE GOVERNANCE

The idea of good Corporate Governance has a decisive responsibility in sustaining economic growth and business continuity by offering vision, a straightforward approach, sustainable development, social inclusivity, and stakeholder confidence

The impression of Corporate Governance revolves around balancing between the companies’ and individuals’ goals. It aims at maximum utilization of resources whilst maintaining the goals of sustainable development and environment protection. The historical revisit amplifies upon the impact on norms of Corporate Governance in the era of Great Depression, World Wars and Global Financial Crisis, which led to twisting and reconfiguring of prevailing norms, laid down since generations. The same mayhem was created by the emergence of Covid-19 Pandemic. The research article herein shall evaluate the position of norms of Corporate Governance in the post-Covid era - whether its impact led to major modifications in the corporation management or has negligible impact on companies’ governance.

Corporate governance norms refer to a set of principles and practices that guide the way corporations are managed, controlled, and directed. They are designed to ensure that corporations operate in a transparent and accountable manner, with a focus on promoting long-term sustainability, ethical behavior, financial stability, and protection of the interests of various stakeholders, including shareholders, employees, customers, suppliers, and the wider community. However, the outbreak of the Covid-19 pandemic has highlighted several weaknesses in the existing corporate governance norms. The pandemic has created new challenges and pressures for corporations worldwide, such as sudden changes in market conditions and working conditions. These challenges have put a strain on existing governance structures and processes, leading to questions about their effectiveness in managing new risks and challenges.

One area of concern is risk management, with many corporations struggling to adapt their risk management strategies to the changing business environment. The pandemic has exposed new risks and vulnerabilities, such as supply chain disruptions, data privacy, cybersecurity threats, and employee health and safety concerns that require new approaches to risk management. Another area of concern is stakeholder engagement, with the pandemic creating new expectations for corporations to be more responsive to the needs and concerns of their stakeholders.

The pandemic has highlighted the importance of stakeholder engagement in building trust and resilience and has underscored the need for corporations to be more transparent and accountable in their decision-making processes. It has also highlighted the need for corporations to have effective crisis management strategies in place, as well as the need to be more agile and adaptable in responding to new challenges and opportunities. The pandemic has shown that corporations need to be able to respond quickly to changing market conditions, and to be prepared for unexpected disruptions that can impact their operations and bottom line.

This Article also aims to evaluate a significant branch of ESG Norms prevailing for maintenance of smoother governance and CSR policies. The countries with the SDG-2030 agenda have aimed to achieve effective governance along with sustainable growth. The said agenda mainly provides for four sections which states about a political declaration, the 17 Sustainable Development Goals (SDGs), its manner or implementation and a follow up and review of the given agenda. The researcher herein shall restrict the study towards the SDGs concerning the area of environmental sustainability. The 2030 Agenda is also interconnected in the sense that it must be carried out as a whole, in harmony rather than piecemeal, taking into account how all of the objectives and targets are intertwined¹. Additionally, more businesses each year discover ways to incorporate conservation efforts into their planned, preemptive, and operational processes. They benefit from having a positive impact on the environment. Energy, waste, and cost reduction have undoubtedly benefited businesses in a variety of ways. A conservationist outlook also gives businesses new chances to promote innovations and inventive approaches that save resources, energy, and the ongoing support of their stakeholders. Companies have envisioned that the cost savings they achieve from their efforts to protect the environment will allow them to expand into new areas, set themselves apart from their competitors, and potentially keep ahead of upcoming regulatory challenges².

As a result of climate change, the socio-economic gap, public pressure, and lingering uncertainty about the well-being of financial markets following the 2008/2009 financial crisis have led to environment and regulatory authorities to implement stringent regulatory reporting requirements, privacy laws, and emission restraints³. It can be witnessed that various corporations by implementing the environmental sustainability have achieved desired goals and innovations.

The renowned corporations such as Adidas and Nike have taken steps towards reduction in carbon footprint and generating greener supply chain along with removal of plastic bags from their retail stores⁴. Further, Unilever and Nestle have also taken steps towards footprint, water management, climate change along with waste management⁵. Also, companies including PepsiCo and Coca-Cola have taken initiatives towards water replenishments in their new agendas⁶. The retail sector including H&M, Ikea and Walmart have also made collaborations towards environmentally sound steps, waste managements and optimal material usage. A significant State-owned iron ore mining business, NMDC Ltd., has embraced responsible mining as its corporate culture and positioned itself in line with sustainable development goals. As a founding member of the UN Global Impact Network, NMDC has taken advantage of their economic potential to reduce risk and work towards resolving social and commercial issues like scarcity of resources and climate change at the outset. Through good governance, many other corporate houses have also made significant advancements in various facets of environmental sustainability. The following are a few of these initiatives⁷:

a. “Energy Conservation & Renewable Energy”: Many reputable corporations and IT industries have corporate policies to achieve energy conservation and employing alternate energy. Infosys installed wind turbines at its campuses in Pune, Bangalore, and Mangalore. It also installed occupancy sensors, LED lighting, and variable frequency drives (VFD) in condenser pumps on chillers. ONGC saved more than INR 500 crores through environment friendly and energy-efficient technologies. Many cement and steel plants used energy recovery systems and alternative energy production methods.

b. “Green Building”: By designing and constructing green buildings, using less power-intensive utility equipment, and other methods, many Indian corporations, including those in the IT sector, NGOs, government buildings, and the oil and gas industry, have lowered their energy usage.

c. “Waste and water management”: To reduce their environmental footprints, the majority of the cement, steel, power, chemicals, pharmaceutical, and extractive industries have now adopted the zero discharge, waste to energy, and resource-neutral concepts.

d. “Preservation of Ecosystem and Biodiversity”: Many corporations, including ONGC, Dhamra-Adani Port in Odisha, Aditya Birla, Tata Group, Ambuja Cement, and Vedanta, among others, have taken steps towards technical co-operation for adopting scientific strategy and workable plans.

The effect of environmental sustainability can be penned down from the steps taken by the corporations aiming towards environmental protection. However, the same generate concerns regarding issues of Greenwashing (misleading promotions by companies for their products, portraying them as environment friendly and sustainable) which is being practiced by various organizations in the light of environmental sustainability⁸.

In conclusion, sustainability is a significant challenge that can only be met by taking an innovative, integrated approach to the problems and opportunities that arise in the areas of the environment, society and governance. The idea of good Corporate Governance has a decisive responsibility in sustaining economic growth and business continuity by offering vision, a straightforward approach, sustainable development, social inclusivity, and stakeholder confidence. With the increase in threats and degradation of the environment and society, there is a need to strictly implement the Sustainable Development Goals. It is significant to note that the idea of sustainability cannot be justified by solely implementing and following the government imposed legal and regulatory framework and principles. While businesses acknowledge that there is an opportunity to collaborate with the government to some extent investments must be made for realizing the Sustainable Development Goals and the government should take steps to assist in smoother incorporation of such investments. There is a need for stringent regulatory and market framework beyond the prevailing requirements of CSR policies, regulatory guidelines and principles for reaping the actual benefits of sustainability in India and across the world. The COVID-19 pandemic has had a profound impact on Corporate Governance in India, emphasizing the need for agility, resilience, and sustainability.

The crisis has compelled companies to reassess their risk management practices, strengthen board structures, embrace technology, prioritize ESG factors, engage with stakeholders, and uphold ethical conduct. By navigating these challenges and seizing opportunities, Indian businesses can emerge stronger, ensuring that Corporate Governance remains a driving force for long-term success and resilience in the post-Covid era.