The best corporate governance practises are those that emphasise corporate social responsibility.

[CSR Today]

I recently noticed an interview in the Latin American news with a well-known executive of a hotel chain. He firmly responded, "Pursuit of excellent corporate governance," when asked which CSR criteria were implemented in his organisation.

This individual seemed to be knowledgeable about his field but was unable to tell corporate governance from corporate responsibility. But I'll contend that his assertion makes a lot of sense coming from someone who has a track record of success leading a sizable organisation, far from exhibiting confused thinking.

The interview that brought up these ideas aims to distinguish between the functions of good corporate governance and corporate social responsibility in businesses and other organisations that are subject to less regulation (public administration entities, non-profits, etc).

Corporate governance was initially established by rules and norms, and its suggestions were restricted to the duties of corporate governing bodies, information models, and reporting chains, and oversight procedures meant to safeguard shareholders.
This changed when the Enron crisis in 2001 caused corporate governance to shift its focus to the calibre of audits. Then, starting in 2008, the crisis brought on by the failure of Lehman Brothers prompted a reconsideration of the accuracy of agency ratings. Since then, we have seen a proliferation of rules, regulations, and recommendations supported by a variety of institutions. The industrialised economies continue to experience this proliferation, which spreads to underdeveloped nations like an oil spill.

The incorporation of much of the social responsibility content into routine management procedures has been encouraged by more recent regulatory developments, institutional recommendations, markets, and, generally, those functioning in the external layer of corporate governance. Some people have adopted responsibility policies only because they were required to do so, but others have done so deliberately because they believe they are necessary for building reputations and maximising intangible value.

The difficulty of locating indicators and metrics to gauge the real impact of social responsibility policies has been a third issue that has pushed the integration of social responsibility models into organisations' strategies. Thus, many businesses have believed that simply incorporating CSR initiatives into existing business practises is the most effective method to capture the value created by those efforts.

Corporate governance has changed from being a tool to make sure shareholders are protected appropriately to a strategy to protect stakeholders generally. Good governance in the modern era emphasises morality, openness, long-term sustainability, and social responsibility.

The sources of non-financial impact are now less clear due to the expansion of company regulation, media pressure on corporations to give back to the communities in which they operate, and growing demands from markets and investors. Is it corporate social responsibility or corporate governance? It's no longer obvious.

We may anticipate that the integration of CSR content into good governance will continue to be a work in progress. The European Council approved the Non-Financial Reporting Directive on September 29. As the process continues to develop, this is undoubtedly one such result.

According to the directive, organisations must provide reports on their environmental impact policies, human rights protection policies, anti-corruption measures, and human resources management models (gender diversity, equal opportunity, working conditions, among others). These and other similar policies must now be detailed in the annual financial reports of the companies or in a separate report on corporate social responsibility. They must also publicly publish the techniques and indicators that will be used to track their progress in these areas, according to the regulation.

Regulators, governments, markets, and the general public are all fully aware that financial gains alone are insufficient justification for investing. They are insufficient on their own to increase brand recognition, draw talent, or inspire trust in the company's long-term value development. The highest governing bodies inside institutions are given responsibilities that are expanding in scope. Boards are required to guide their organisations in their role as major agents of long-term social change. They must ensure the restoration of inclusive and balanced economic development while empowering their businesses to play an ever-more crucial role in addressing today's economic, social, and environmental concerns.

In keeping with these concepts, the BBVA Microfinance Foundation has developed a cutting-edge governance model that is utilised by all financial institutions in which we have investments. A unified model of management and relationships is established for everyone by our new Corporate Governance Code. The objective is to strengthen our commitment to producing an inclusive social impact that is long-term sustainable and to build value and reputation.

We and those working with us must uphold the strictest standards of good governance as a foundation, solely motivated by a dedication to society and to our founding ideals. Non-profit organisations do not necessarily need to prioritise making money, so we must acknowledge the specific significance of our company's social impact and the creation of intangible value. Only company models with the best practises in corporate social responsibility at the core of their corporate governance may achieve such objectives.

More advancements are on the way to support your sustainability initiatives and environmental intelligence, including an engine to track and lower your energy costs and carbon emissions as well as one to evaluate and lessen the risks associated with climate change for your company, such as wildfires and flooding.