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Corporate governance is centered around the sustainability of organizations because it is important for the development of society and the organization in general. It also provides a sense of faith and trust in the corporation leadership within companies. It is in the best interest that the corporations take the best practices or actions possible to reap the benefits of better relationships and goals in the corporation and its society. Additionally, the implementation of the pillars of corporate governance and the aspects of sustainability is to increase market value, reduce operating costs and wastage, increase profits along with production, and protect the well-being of society. This improves the corporation's ability to thrive and prosper in the economy.
Corporate governance involves a system that encompasses rules, practices, procedures, and processes by which an organization is directed and controlled. Corporate governance implies the relationship among various participants (shareholders, the board of directors, and the company's management) in determining proper guidance for the performance of its corporation. This illustrates a structure that attains a company's objectives as it associates itself with every aspect of management, for example, action plans, internal controls, performance measurement, and corporate disclosure. The importance of corporate governance is to its investors as it represents a company's blueprint and integrity. Good corporate governance helps companies build trust with investors and the community. As a result, they help accomplish a company's end product, guide decision-making and provide sustainability in a company's economic performance by promoting financial viability with a long-term investment opportunity for market participants. Furthermore, the sustainability of an organization is the ability to achieve its goals and increase long-term stakeholder value by integrating economic, environmental, and social opportunities into its strategies. Sustainability demonstrates its potential by fostering balanced development of its aspects as it can provide high ethical and economic concerns. This illustrates economic/organizational gain with profits as it works for social and environmental purposes as well.
To achieve a successful functional company and a solid working relationship four corporate governance pillars must be implemented. These pillars include accountability, fairness, responsibilities, and transparency. To provide the concept of good corporate governance along with sustainability in an organization, the use of the four pillars along with the three aspects of sustainability can be used to evolve the value to society and the long-term growth of a company. The first aspect is economic sustainable development which can be best applied by the organization. This is because of the responsibilities of the employees as they carry out ethical and appropriate actions of the firm by following the desire of employers in keeping with the law and the financial obligation to maximize value capital and profits for its shareholders. Economic sustainability can be related to the level of production or production costs. Considering the stakeholder's issues can provide greater competitive advantages as this creates value and profitability in the company.
With a manufacturing organization, environmental sustainability is important as it indicates the uses of energies along with other alternatives/resources that can impact positively or negatively based on the activities/actions of an organization. Sustainable progress involves a range of environmental issues such as waste/pollution reduction, energy efficiency, decrease in air radiation, diminish the utilization, or disposal of hazardous/harmful materials to avoid environmental accidents, etc. To achieve these goals, corporations must be accountable in managing the board of directors based on their decisions for the company by being fair to protect, treat, prevent, and provide effective redress for violations that may or have occurred. This can occur with the use of economic decisions and policymaking.
Based on a company's context, social sustainability is about attaining knowledge of the impacts the corporation can have on its people and society. Social responsibility is a measure of achieving sustainability. Adopting key social responsibility principles, such as accountability and transparency, can help ensure the long-term enhancement and success of any organization or system. Social sustainability should be a critical part of an organization as it can affect the quality of a business's relationships with stakeholders and its customers (society). Sustainability can also be defined as a strategy of a sustainable development process by providing equal opportunities, fostering diversity, encouraging social contacts within and outside the company, and guaranteeing the quality of life and safety and security of its employees. Corporate sustainability is seen to positively affect the ecosystem, the product/service provided by the company, and the community based on the health and welfare of society with the use of ethical behavior/decisions. Poor social sustainability is a risk to both the brand image and the quality of the product of the organization.
Consequently, corporate governance is central to the sustainability of an organization as it encourages the betterment and well-being of society and for the organizations to reach their full potential through social, economic, and environmental. It is an investment in growth and fairness, as well as in providing unity within the internal and external views of an organization. Corporate governance demonstrates structure as a form of guidance to aim for sustainability. Sustainability provides consistency because of a sustainable lifestyle or decisions.
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