A global perspective

On July 4, America was celebrating its Independence Day with all the picnics, barbecues and weekend-long festivities that could be crammed into summer’s first official long weekend. In Birmingham, England, a different kind of gathering was taking place. The Birmingham Business School, University of Birmingham was hosting its third annual conference on corporate governance and social responsibility, which was organized by the School’s Center for Corporate Governance Research, and it was attended by delegates from as far away as Australia, Canada, Japan, New Zealand and the US. 

Professor Christine Mallin, the conference organizer, says, ‘The conference has been a great success, with delegates from 17 countries in attendance and over 30 papers presented on corporate governance and social responsibility – we have benefited from research on many facets of the subject. Having Sir Adrian Cadbury here to chair our keynote plenary session really added value to the conference.’ 

As Mallin mentioned, Cadbury attended the conference and chaired the afternoon session. Cadbury was instrumental in the development of modern governance for the work he did leading up to the Cadbury Report (first published in 1992), which spelled out methods of achieving a balance between board powers and their accountability to shareholders. The 19 recommendations of the Cadbury Committee on Corporate Governance formed the foundation of many of the innovations and regulatory developments of the past twelve years. 

Simon Tregillus, European sales manager of Datacare Software Group and a conference attendee remarked, ‘It is a rare opportunity to share the same platform as Sir Adrian. This event demonstrates the need to address corporate governance issues and highlights the importance of international cooperation to develop an environment that increases transparency and reduces the risks of systemic governance failures.’ 

The morning sessions were as diverse as they could be in the field of governance. Session topics included, just to name a few, the legitimacy of corporate social responsibility, a case study of DaimlerChrysler; secrecy, collusion and coalition building in corporate governance; effective board monitoring; and governance in a large organization. Although there were a few topics that were regionally specific, such as actuarial governance of UK life insurers, they still added value to the international agenda. 

The research proved to be rich with real-life examples and gave many of us in the governance profession a sense that our time is here. We are finally being heard. The years that we spent delivering our message of ethics, values, principles and governance are now paying off. New ground is being broken and new research is validating our argument that good governance will lead to better financial performance and increased stakeholder satisfaction. 

Corporations and citizenship

This is the title of the presentation given by Professor Dirk Matten, chairman of Business Ethics, Royal Holloway, University of London. Matten’s presentation was exemplary of how corporate citizenship has emerged in the field of social responsibility. He gave us a perspective of how companies such as Ford Motor Company, Nike, Nokia and Unilever have grasped this mantra and incorporated corporate citizenship into their public personas. Matten explored how corporate citizenship has become the most recent terminology in management literature. His presentation concluded that the existing conceptions of corporate citizenship are inadequate to justify new terminology and that corporations are not citizens, arguing corporations should seek a more modest and sustainable path rather than promoting an image of corporate citizenship that may heighten a company’s social commitment to an unachievable level. 

Robert Monks, founder of Institutional Shareholder Services, activist and governance guru, gave a dynamic perspective of how companies need to be socially responsible and fiscally accountable. His presentation provided us with intriguing insights into corporate and socially responsible behavior and how we are all affected when companies do not act responsibly. When asked about America’s refusal to participate in the Kyoto Protocol, he could only say that some environmental decisions made by the US government have been baffling. However, he did elaborate that investors should inform themselves on companies they plan to invest in and find out what the companies’ track record is like in socially significant areas such as the environment. 

When are bananas not just bananas?

One of the more interesting sessions was ‘Banana wars: multi-stakeholders and corporate governance,’ presented by Maria Gonzalez-Perez, who discussed developments in corporate governance in the banana industry and the effect it is having on both the companies involved and the countries in which they operate. This is an industry with a dark past, known for its disregard for social, economic, ethical or moral responsibilities. She demonstrated how increased awareness of the problems and demands for improvements from consumers and regulators forced the industry to change in order to survive. 

Gonzales-Perez concluded that an improvement of corporate social responsibility (CSR) and corporate governance practices at one company can have a dramatic effect on an entire industry and indeed other sectors of the economy as well. This ties in with evidence we have seen regarding the global effect of governance changes within US firms and the effects this is having on international companies. 

The success of this year’s event was underpinned by the quality of the speakers, well-thought-out topics and insightful research. The international importance of corporate governance and the vital role that must be played by the international community was evidenced by the global nature of the attendees. If you want to stay on the cutting edge of international developments in corporate governance and CSR, you should plan a trip to Birmingham next year.

Brian Chartier is director of consultancy services with Datacare Software Group