Good Corporate Governance and Sustainability - Research Paper Example

Final DraftSustainabilityGood corporate governance is also associated with sustainability. Corporate sustainability is a strategic approach which focuses on a company’s effectiveness and efficiency; it is related to its productivity and the creation of value for the owners. Corporate sustainability is often implemented from social, economic and environment dimensions. Corporate governance performances and the relation of social, environmental, and economic performance should be the subject of further research.

In this regard, corporate governance can make a contribution in long-term strategy (Mallin 18). A perfect example here is Ford. The company recognized that it is vital to establish some sustainability-specific structures and processes. Under the good corporate governance applied, Ford performed very well in business plan development and compensation, business plan review, special attention review and automotive strategy meeting, corporate policy letters and directives, management systems. That is the main reason why Ford is only one of the auto companies which kept performing during the 2008 global financial crisis in America.

Influence of Corporate Governance on Diversity in Companies Mallin (23) asserts that the element of diversity in companies is one of the things that benefit from corporate governance. Corporate governance promotes diversity by, firstly, ensuring a board of governance or company leadership that respects diversity. Gender diversity in companies’ leadership is one of the crucial issues commentators of corporate governance have emphasized. In the past five years, seven countries have passed legislation mandating female board representation and eight have set non-mandatory targets.

A study of Canadian companies showed that boards with three or more women performed much better in terms of governance than companies with all male boards. The study also found that the more gender-diverse boards were more likely to focus on clear communication to employees, to prioritize customer satisfaction, and to consider diversity and corporate social responsibility. To illustrate the point above, McKinsey & Company, as the world’s leading consulting firm, is a great example in the real world.

Mallin (24) attributes the improvement of a company’s economic and financial performance to the varying skills and abilities of diverse groups of people. He argues that the skills of people from different backgrounds outperform homogenous groups. In order for companies to uphold corporate governance to ensure diversity, they invite applications from the public. This helps companies to pool a variety of skills and abilities from which they can appoint able candidates. In addition, corporate leaders use mentorship to educate persons from lower levels with the skills requisite to handle senior positions.

Corporate governance requires companies to support and advance people of diverse capabilities in all levels. According to Mallin (27) this support and advancement includes encouraging employees to continue with further studies as they work. Some companies target specific groups of people that are lacking or are few among their personnel or on boards. This involves looking out for talented individuals and providing sponsorship programs that increases the future supply of director candidates and their senior positions.

Works CitedMallin, Chris A. Corporate governance. 4th ed. Oxford: Oxford University Press, 2013. Print.