The consultation paper argues that corporate governance is, or should be about creating value and that governance codes should be evaluated on how well they facilitate the creation of value. During the conference, 76% of those who voted either agreed or strongly agreed that creating sustainable value should be the overarching purpose of corporate governance.
It also sets out how a framework of ‘performing, informing and holding to account’, imagined a three-legged stool and designed to help assessing and enhancing how well governance is working.
The framework envisages that the overarching purpose of governance, and indeed of most companies, should be to ensure that sustainable value is created and that three elements must work for value creation.
- Performing: companies and those within them including the board must perform, i.e deliver performance that contributes value;
- Informing: the performers need to provide good information on their performance to those to whom they should be accountable; and
- Holding to account: those who should hold others to account (such as shareholders in relation to boards and boards in relation to executives) actually do so.
The paper also discusses the factors preventing governance from working better and places governance in the bigger picture, linking it with value creation and economic growth.
You can contribute by responding to the consultation.