Ideas for Your Company’s Online Governance Portal

When deciding on which governance instruments should be created and implemented a point of reference is helpful.  For companies with securities listed on public securities exchanges such as the New York Stock Exchange or Nasdaq the obvious point of reference are the listing requirements of those exchanges.  Many of the larger private companies use the same governance instruments as public companies, often at the insistence of their stockholders and in recognition of the fact that their operations can be extensive and involve contact with a variety of different stakeholders.  Another suggested point of reference is how best to present the company’s story to anyone who might visit the company’s website, which is frequently the first place that stakeholders will go to learn more about the company, its business and its products and services.  Investors, customers and prospective employees rely on websites for information and the impact of online presentation should not be underestimated.  Companies should not only provide information on governance instruments and practices, they should also place them in context with the company’s mission, values and sustainability commitments.

All companies, regardless of how important sustainability is to their purpose, strategies and operations, should have an overriding mission that describes their “reason for being” and establishes a guidepost for measuring success.  The mission, often formalized in a “mission statement”, should be supported by a set of values that directors, executives, managers and employees can refer to when taking actions and making decisions on behalf of the company and interacting with external stakeholders.  Facebook co-founder and CEO Mark Zuckerberg suggested that the company’s mission was to “develop the social infrastructure to give people the power to build a global community that works for all of us” and that this should be done by supporting life experiences by building communities; increasing the quantity and quality of information; increasing civic engagement; creating more-inclusive communities, and keeping people safe.  For global health care giant Amgen the mission has been simple–“to serve patients”—and the accompanying values included being science-based; competing intensely and take the required risks, subject to high ethical standards, to achieve high quality results and win; create value for patients, staff and stockholders; be ethical; trust and respect each other; ensure quality; and work in terms, collaborate, communicate and be accountable.

A compelling the statement of mission, purpose and values is essential; however, it is not sufficient for success and will not protect the company from missteps with respect to corporate social responsibility.  The missing necessary piece, aptly illustrated by Facebook’s troubles in the wake of the 2016 US Presidential elections, is a robust corporate governance system that establishes and enforces accountability, both internally and to all of the company’s stakeholders.  As noted by Kiron and Unruh writing for the MIT Sloan Management Review in April 2018: “Any corporate purpose, however laudatory or noble that mission may be, must be accompanied by strong governance.”  The website should include the board of directors’ corporate governance principles, guidelines for director qualifications and evaluations, the directors’ code of conduct and, in situations where the board has appointed a “lead independent director”, a description of the duties and responsibilities associated with that role.  Charters for each of the committees established by the board should be included (e.g., audit, governance and nominating, compensation and CSR committees).  Many companies also post copies of the current version of their core governance documents such as the articles/certificate of incorporation and bylaws.

With respect to ethics, the directors’ code of conduct mentioned above should be supplemented by the more comprehensive code of conduct applicable to all of the company’s human resources including members of the executive team, managers, employees and contractors.  Public companies and larger private companies should also have a code of ethics for the CEO and the company’s senior financial officers.  A supplier code of conduct should also be implemented to provide guidance on overseeing the actions of supply chain partners with respect to key sustainability issues.  Companies often supplement their corporate governance principles and ethics codes with additional policies on specific topics and issues.  For example, the board of directors, either directly or through the lead of one of its committees, may implement policies relating to work environment, political contributions, anti-bribery, conflicts of interest and/or health and safety practices.

Companies should also showcase their commitments to CSR and the formal corporate governance structures that have been implemented to pursue those commitments and the report on the progress of those efforts.  A separate statement of sustainability commitments should be developed, approved and disseminated by the board of directors.  In many cases these commitments are similar to the company’s overriding mission; however, sustainability commitments often have a different focus.  For example, at Amgen the primary CSR commitment was “making a positive impact on the world”, a goal that the company committed to pursuing by being attentive to the following: working with the entire healthcare community to create a fertile environment for innovation and to encourage an equitable healthcare system that enables patients to access the medicines they need; inspiring the next generation of innovators through financial support for the scientists of tomorrow and those who teach and support them; providing access to medicines for patients regardless of their ability to pay and making investigational medicines available, if appropriate; environmental sustainability with respect to products and packaging and supplier sustainability with respect to supplier conduct and diversity; providing significant financial support as well as equipment donations in-ind to help make a difference in people’s lives; “doing the right thing” and being ethical, trusting and respect each other, ensuring quality and being science-based (e.g., ethical research practices, responsible marketing and product information, business conduct, work environment, privacy pledge to patients etc.); and creating a safe and healthy workplace for the company’s staff.  The website should include articles on various aspects of the company’s sustainability commitments and programs and copies of the company’s annual sustainability reports.

Finally, the website should include information that will allow stakeholders to contact the company to register complaints, or provide information, about potential violations of law and/or any of the company’s internal governance instruments and policies.  Stakeholders should also be provided with a means for communicating with the company’s board of directors for any reason, not just complaints but also perhaps to share ideas or begin dialogue on a particular sustainability topic or issue.  In most cases, communication with the board will be channeled through the corporate secretary’s office.

Alan Gutterman is the Founding Director of the Sustainable Entrepreneurship Project, which engages in and promotes research, education and training activities relating to entrepreneurial ventures launched with the aspiration to create sustainable enterprises that achieve significant growth in scale and value creation through the development of innovative products or services which form the basis for a successful international business.  Visit the Project’s Library of Resources for Sustainable Entrepreneurs to download handbooks, guides, articles and other materials relating to sustainable entrepreneurship and keep up with the Project’s activities by following Alan on LinkedInTwitter and Facebook.

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