Enhancing Governance Transformation- Part 2
In the previous article, we discussed the evolution of corporate governance in the United States of America ( USA) as it preceded the reforms related to the environmental social governance ( ESG) issues including the other important capitals. We congratulated the US for corporate reforms that have been glaringly taking place in that country.
We also discussed how the US was, initially, reactive unlike the other countries in response to the corporate scandals that precipitated the emergence and evolution of corporate governance. That was evidenced by their legislated code on corporate governance which caused the country a great deal in terms of time, economic, financial, and human capital; people who perpetrated corporate crimes were tried in courts, convicted, and sent to prisons.
In the article of 02 July 2021, we started a discussion on corporate reforms taking place in the US, which we believe are, as a result, of the country’s lessons from her previous effects of corporate governance upheavals. One other thought might be that there is looming social and economic degradations and other environmental imperfections, due to, lack of control on climate change and the issues on the environment by nations of the world. United Nations has announced that within about a decade, the Planet will be destroyed due to the forces of climate change.
The world is also inundated with a multiplicity of issues negatively affecting mankind. According to Intergovernmental Panel on Climate Change ( IPCC) special report of 2018, on the impacts of global warming of 1.5 degrees Celsius above pre- industrial levels and the related greenhouse gas emissions are pathways in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty. These initiatives are targeted between 2030 and 2052, said the special report. Corona virus with its resultant COVID 19 and its iniquitous variants are threatening to eradicate mankind, ravaging all prospects of economic development more than any time in the past. In addition to that, social issues including hate threaten communities and countries, resulting in civil, international, intercontinental and world conflicts.
Based on that, the need for merged congeniality and commonality of purpose for reasons of building a collective resilience was never so urgent like now. This spirit of working together towards one goal is increasing in some parts of the US both corporate and individuals.
Despite this phenomenal development being based on cultural and racial background, it shows that there could always be a start, that could be perfected at a later stage. Businesses are reaching unprecedented growth due to the consumer patterns of demands influenced by the current social and economic trends. The last article illustrated how the demand patterns grew, tilting towards businesses that observed environmental issues and climate change including the other social imperatives. It indicated the manifestation of those change of consumer demand patterns in favour of the latter pro- Black Lives protest in June 2020 business owners.
Professor Rebecca Henderson further emphasized to the enlightenment of society on the removal of the myth that sustainable businesses do not pay. She continued encouraging the employees, especially the youth that they should avoid leaving their constructive ideas out of the office before embarking on their official chores as those can develop their innovative thinking of solving business problems.
She added that those could, as a result, contribute to their rewarding careers that will contribute to the building of a sustainable world. However, Professor Henderson admits that it takes a long time to meet the requirements of a sustainable business, start and run it. Nevertheless, she says, there are more merits in sticking to a sustainable business than those of its counterparts. Takeaways back home, it takes a minimum of three years for businesses that are targeted to be long- term to start making sense to its shareholders.
The benefits of running a sustainable business are as follows: In the US where education and knowledge pervade many areas, a sustainable business experiences more financial gains than its unsustainable counterparts.
The research indicates that consumers focus on buying from sustainable brands is on the increase.
In 2019, sustainable businesses products delivered close to 114 Billion US Dollars in sales making a 29 percent increase from 2013.
Products marketed as sustainable grew more than five times faster than their counterparts. Available: online. hbs. edu/ blog/ post/ sustainability- initiatives Accessed: 12 July 2021. Back home it should be appreciated that sustainable business appeals more to stakeholders than to shareholders. We believe this mindset will change within a few years to come; otherwise, those that are not prepared to change will lose a lot of prospective businesses. The main issues threatening sustainable development are, not taking care of the environment, climate change, biodiversity, corruption, political and religious/ faith conflicts ( the latter precipitated and compounded by extremism).
In the next article, we will continue with the benefits of sustainable businesses and give case studies for sustainable business projects; as always, we are grateful for the feedback from our readership.